Holes are appearing every day in our so-called safety net, as state and local governments, in particular, are forced to cut back on public programs. But even amidst all the budget cutting, most elders and disabled people probably feel that their monthly Social Security checks are something they can count on. Having escaped attempts at privatization under Bush, Social Security might appear secure, at least in the short term.
Maybe not. As New America Media* reports, debt collectors for credit card companies and other creditors are now going after Social Security payments, which are supposed to be exempt from garnishment in such situations. Their tactics include freezing the bank accounts into which a beneficiary’s Social Security checks are direct-deposited. When this happens, often without warning, old and disabled people find themselve suddenly without the resources to buy food and medicine, which can trigger a desperate medical crisis.
That’s right. The meager amounts deposited into our accounts by the Social Security Administration, which many older people now must rely on more than ever before because of layoffs, the real estate crash, and the 401k collapse, are being illegally siezed, often by the very same companies that brought on the crisis in the first place–the big banks and other financial institutions that issue loans and credit cards. After taking in billions in public stimulus funds, they are wringing out every last dime by going after these public pensions, which are supposed to be protected. When you read stories about how Wall Street is relaxing with the comeback of high pay and big bonuses, think about this:
Margot Saunders of the National Consumer Law Center estimates that “tens of thousands of people every month,” who are elderly or disabled, are being forced into dire financial circumstances. Bank account freezes and illegal garnishments of exempt funds, including veterans’ benefits, are shredding safety nets. In her 2008 testimony before a House Ways and Means Subcommittee on Social Security, Saunders included a long list of stories…..
According to SSA, its payments provide baseline financial solvency for 13 million Americans, who would otherwise be in poverty. However, a 2008 report by SSA’s inspector general, estimated that direct-deposit beneficiaries across the United States have incurred $177.7 million in total garnishments. The report did not attempt to estimate the near incalculable damage of bank account freezes.
Bank account freezes are designed to prevent account holders from withdrawing funds before creditors can collect on legal claims. Debt collectors, though, often file claims on exempt accounts.
“The freeze creates a hostage-like situation where the creditor can wait out the debtor by demanding payment,” said attorney Johnson Tyler, director of the Social Security/Consumer Rights Unit at South Brooklyn Legal Services.
Tyler explained that often consumers don’t know SSA funds are exempt and agree to make payments to have the freeze lifted, so they can access their accounts. He suggested the problem might be worse in communities where limited proficiency in English is common.
The story includes the account of one 60-year-old disabled man, recovering from open heart surgery and dependent upon his monthly Social Security, who went to fill his prescriptions one day, only to find that his Washington Mutual bank account had been frozen because he owed money on an old credit card bill. (Think about it: You know that without the medicine you’ll probably die. What would you do? Would you beg on the streets? Or maybe go for some poetic justice, and rob a bank?)
While these illegal efforts to steal exempt funds (which also include SSI, veteran’s benefits, and unemployment insurance) have been going on for some time, they are bound to be increasing with the recession: While more and more people find themselves hard pressed to pay their bills, a couple of trillion in taxpayer funds doesn’t seem to have bought any mercy from the bailed-out banks.
*This story reflects the new “Ethnic Elders” and “Elders News Roundup” initiatives being run by Paul Kleyman at New American Media, a unique news organization that both aggregates material from the nation’s thousands of ethnic media outlets, and produces original content. In its own words, NAM is “dedicated to bringing the voices of the marginalized–ethnic minorities, immigrants, young people, elderly–into the national discourse.”