Posted on 06/23/2009 1:27:26 PM PDT by BP2
Edited on 06/23/2009 3:30:20 PM PDT by Admin Moderator. [history]
WASHINGTON (AP) — Bill collectors are exploiting a legal loophole to seize Social Security and veterans' benefits even though federal law is supposed to protect the payments from creditors.
Lawmakers from both parties who have been pressing the Treasury Department for years to close the loophole with new regulations are growing impatient. The Obama administration is now promising action but has offered no timetable for developing the new rules.
So if you're behind on your bills, and are on a fixed income from the government, watch out if you get your SS or VA benefits direct deposit.
I am not sure where I come down on this.
I think, if they want protection, they should go to bankruptcy court.
You can’t just tell people that they do not have to pay their bills -— or THEY WON’T Pay Their Bills!
The IRS cannot seize any of your property without giving you a Final Notice of Intention to Levy and a notice of your right to a Collection Due Process Hearing.
ping
NYC PVB used to do this also.....may still.
So precisely what IS the loophole? Why the difference between direct deposit and check deposit? The only loophole of which I am aware has to do with the mingling of funds in one account. Some SS funds and some “other” funds. That allows creditors to claim that the account is not indeed a Social Security account, and lay claim to it. I don’t know if this is what the article writer is talking about or not. In any event, make certain you have a separate account for SS funds, clearly entitled Social Security Account. Then get a second checking account.
I use to be hard line and highy critical of people who would let themselves get behind on their credit card payments. However, seeing enough friends and family who have been laid off in the last few months, or asked to cut back on the number of days they work — well, I’m a little more sympathetic.
I guess I’m getting too soft in my old age...
Two words: Separate accounts.
I think it is wrong headed to come up with any more “alternatives” to bankruptcy -— this is what got us into the GM and Chrysler mess.
Bankrputcy can be a very honorable decision.
I’ll assume you’re right, LL. I’m just going by what I’ve heard. Maybe the guy I heard it from was actually notified as you say, but was ignoring his mail and got levied because he didn’t respond to the final demands.
Still, the premse makes sense — why would the IRS give “tax cheats” a warning if they’re going to seize money?
They certainly don't give notice that they are going to seize a particular bank acount on a particular day. But, as a result of the taxpayer Bill of Rights which Congress enacted a few years back, the IRS cannot begin the entire process of seizing assets without sending a written notice, which includes the notification of a right to an administrative hearing (and review in the Tax Court). (I just finished a trial in Tax Court last week of a petition to review an adverse finding by the IRS at a Collection Due Process hearing.)
I know for certain it has happened that they emptied a bank account without any sort of notice.
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