SENIORS: You May Not Be As "Judgment-Proof" As You Think You Are

Here's the story in a nutshell: the money that goes into my checking account is strictly from the Social Security Administration (SSA). This money is supposed to be exempt from seizure by creditors. I used the debit card associated with the checking account to make three purchases which resulted in returns and refunds that were credited to my account. Apparently, these credits looked like income from non-SSA sources, and so a creditor bank swooped in and seized the money, and my bank charged me a hefty fee for processing the levy.

The "story in a nutshell" above raises a couple of questions, the first being: how did the creditor bank, a very big one, learn about my checking account at a much smaller bank? One thought is that the big creditor bank handles credit and debit card transactions through the card swiping devices at retail establishments, and my use of my card at, say, the local supermarket, tipped them off. Or maybe a check that I wrote to someone was deposited into an account at the big creditor bank. Another idea is that my smaller bank, over the past few weeks, sent me unsolicited credit card applications in the mail which were discarded. Prior to mailing such solicitation, typically a bank will do a pre-authorization by pulling the accountholder's credit report for this purpose, and a record of this is kept which can be viewed by other financial institutions.

Well, the answer, whatever it may be, to the first question above does not address how the creditor bank would come into the knowledge of the detail of my bank account, meaning the reversal of purchase transactions (the credits for refunds). There would have to be some violation of banking confidentiality laws here, right? I don't really know, but the big bank would have access to this information if they handle all of the data processing of the smaller bank, which does happen in the world of banking and finance.

Here's the thing: the amount that the big creditor bank seized is far less than the total amount of the judgment. In fact, that smaller amount doesn't exactly add up to the total of my last three refund amounts. It's off by about $10.00. My bank claims that it has nothing to do with the formulation of the court order for asset seizure; they just comply with it, and they say that, while that court order states the total amount of the judgment, it specifically designates the smaller amount to be seized. My bank offers no explanation as to how the smaller amount was arrived at.

Here's a bigger thing: my bank says that it does not stand in the way of an asset seizure AT ALL even if exempt assets are being targeted. They tell me that, if there is some problem here, then I have to take the matter up with the court. Initially, one of their customer service reps told me this. I did not buy it. Later, a second customer service rep told me the same thing. I still did not buy it; I thought that I was just being given the royal runaround.

Much later, having dealt with one of my bank branch's officers and with a lawyer, I learned that this is, in fact, how things are. The conclusion is that a creditor bank can seize a whole lot of non-seizeable assets from the town widow, and then it is incumbent upon her to go to court, file motions, and go through hell to get her Social Security money back. In the meantime, the po, po old lady can starve to death.

So here's yet another question: if the big creditor bank could have gone for the entire amount of the judgment by seizing much more of my exempt SSA money, and could have left me in the lurch to go through hell to get it back, then why didn't they? Why did they settle on a much smaller amount that sorta looks like the sum of the last three refunds to my account? Even my own bank cannot explain this, and they must have much experience in dealing with such things.

Why would the creditor bank do what they did for an amount that I admit to be peanuts? If they violated bank confidentiality laws, why would they do this for peanuts... unless they are doing such things on a much grander scale?

Words of wisdom: Neither a borrower nor lender be. And, for heaven's sake, never, never take out a student loan. (BTW, a student loan is not the issue here. My relatively small student loans were paid off decades ago.)

P.M?

a reply to: theworldisnotenough

Get a Paypal credit card that links to your checking account!

Use it instead of your debit card. If you return anything bought on the Paypal card it is credited to your Paypal account and NOT your checking account.

Sorry you got shafted, but contrary to popular belief, bankers are NOT your friends.

It's a wicked game, but one little slip and they gotcha!

BTW, if your account is still frozen, go to another bank and open up another account to have your Social Security check deposited into.

They will ask you about your frozen account and just tell them what happened and remind them it is against the law to garnish Social Security payments.

Good luck!

a reply to: theworldisnotenough
The simple answer? Go to Mexico and renounce your citizenship. Then cross back into the country and you'll be taken care of handily with free medical care and all. Heck, go back to school too and they'll pay for that as well as long as you're an "illegal" alien.

The lien nomenclature allows for automatic notice in the case of non-seizeable assets. Your bank has to notify the creditor whenever seizeable assets are deposited. Your refunds are not considered SS assets once you spend them. That the law your bank has to follow. You could argue the point in Small Claims but you would probably just wind up losing the filing fee for your trouble.

It's getting more and more that you should use banks less and less. There is not enough oversight in high street banking anymore, too many automatons who look the other way. That gives the perfect blend of legal criminality between banks and government departments.

If it's a store you frequent when you do a return, perhaps you can get a store credit. Most stores would rather do that and keep your money then give you a refund and spend it elsewhere.

We don't call them "banksters" for nothing. Thanks for the headsup. Though I'm not collecting my SS yet, it's nice to know these things. Good luck to you!

originally posted by: boomerdude
The lien nomenclature allows for automatic notice in the case of non-seizeable assets. Your bank has to notify the creditor whenever seizeable assets are deposited. Your refunds are not considered SS assets once you spend them. That the law your bank has to follow. You could argue the point in Small Claims but you would probably just wind up losing the filing fee for your trouble.

Well, OK.

While I don't doubt your word, especially about wasting my time in Small Claims Court, your response still has not cleared up how the big creditor bank found out about my bank account at the small bank.

I never was out to hide this from them; it's just that it never came up.

The lawyer with whom I spoke just said that the banks have their way of finding out things.

Moreover, the lawyer did not tell me about automatic notice of seizable assets nor did anyone at my bank. The bank officer at my bank branch told me they have no idea how the smaller amount was arrived at.

originally posted by: seeker1963
a reply to: theworldisnotenough

Get a Paypal credit card that links to your checking account!

Use it instead of your debit card. If you return anything bought on the Paypal card it is credited to your Paypal account and NOT your checking account.

Sorry you got shafted, but contrary to popular belief, bankers are NOT your friends.

It's a wicked game, but one little slip and they gotcha!

BTW, if your account is still frozen, go to another bank and open up another account to have your Social Security check deposited into.

They will ask you about your frozen account and just tell them what happened and remind them it is against the law to garnish Social Security payments.

Good luck!

You might want to take a closer look at Paypal before recommending such an action. Paypal operates as a bank without any of the pesky regulations or insurances that proper banks have. Paypal can, and will, seize your money with no explanation and little to no recourse. You are at their complete mercy. At least with a bank you have some recourse. Banks suck in general but paypal is WAY worse. Credit unions are a good choice.

a reply to: seeker1963

Your situation, makes me wonder if perhaps you have been caught up in a web of your own making. The only question I have that can get me to consider that you were abused by the system is did you make those three, evidently, large purchases and then return them for cash in your pocket because you were trying to beat the system yourself?

This is something my grandmother has mentioned could happen if she bought & had to return things bought with a debit card, and why she only used checks or cash in stores. She refuses to have a debit card mostly for this reason alone (and because she feels they're less secure than the alternatives) My mother has accused her, for years, of being paranoid for no reason, but evidently it's not without merit, judging by your experience.

As to how they found out about your smaller account, my guess is through your social security number. As far as I know, no bank will let you have an account without one, and it seems to me it would be easy for those who can do it to run a financial check on any & all accounts you hold.

UPDATE: I just got a letter and documentation regarding the court levy against my checking account from my bank today, and it seems that the information that I got from the bank officer at my branch was false.

She said that her bank had nothing to do with the calculation and determination of the amount that was seized from my account.

The documentation that arrived today tells another story, and the fact that some credits to my account were reversals of transactions (refunds of purchase amounts) has nothing to do with things.

This is how it works: the bank added together the last two deposits to my account from the Social Security Administration and deemed the excess over this sum to be seizable.

There is a paragraph included with the information advising me of my options if I feel that any of the funds that were removed from my account were from Federal benefits and should not have been removed. The amount is so small that it is not worth the trouble. However, I’d like to add that the bank levy fee is about twice what they charge for a returned check.

What state do you live in?

Was it a private debt, or federal government?

The reason I ask is, some states make garnishment much more difficult, and other states really cooperate, even facilitate.

If you google "debtor's haven", you can read about my home state.....