Offsetting Justice: Protecting Federally-Exempt Benefits from Garnishment and Bank Set-Offs

Abstract

For the millions of Americans who rely on direct deposit for receipt of their monthly federal benefits, section 207 of the Social Security Act provides a necessary protection against creditors. This federal law protects federal benefits from garnishment, attachment and other legal processes, but the courts, federal agencies, consumer groups and other stakeholders are in disagreement over its scope. This Note serves as a comprehensive review of the exemption, discussing its policy and history as well as case law that highlights the difficulty of applying its provisions to modern day banking practices. This Note concludes by advocating legislative and administrative actions to protect recipients of federal benefits payments.