Credit unions need to be aware of significant changes that have been made final to the garnishment rule that are effective June 28 and were approved by the Treasury Department, Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board, and the Office of Personnel Management. The final rule amends garnishment of accounts containing federal benefit payments. The amendments make two changes that credit unions should review:
The definition of a garnishment order will now include orders or levies issued by a state, state agency or municipality.
The agencies have also changed the application of the rule as it applies to master and sub accounts:
“The requirement to perform an account review applies to the deposit account to which a federal payment is routed and credited. In cases where a payment recipient is assigned a member number that doesn’t represent an account per se, but that serves as a ‘‘prefix’’ for individual sub accounts, it is the individual sub account (and not the ‘‘master account’’) that is subject to the account review and look back.”
The rule also includes changes to identifying federal benefit payments and requirements for collecting a garnishment fee.