A bank that receives a garnishment order against an account holding Social Security or SSI deposits has two business days to review the account and must protect up to two months of those deposits, a Treasury rule in 31 CFR Part 212 says. If the account holds more than the protected amount, the bank then has three business days from the review to send the account holder a written notice. The rule, in place since 2011, also covers Veterans Affairs, Railroad Retirement and federal civil-service retirement payments.
Who needs to check this? Anyone who gets Social Security, SSI or another federal benefit by direct deposit and has a creditor, a judgment or a collection lawsuit in the picture. The question is whether the bank has set aside the protected amount, left it fully usable and mailed the notice when more money sits in the account. A missing step is something to raise with the bank in writing.
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What must a bank do in the first two business days?
Under section 212.5, the review has to happen no later than two business days after the bank receives both the order and enough information from the creditor to identify the account holder. The bank must run the review before it takes any other step on the order, and it runs it for every account in the debtor’s name, one account at a time. It does not trace money that was moved in from another account.
The review looks for a federal benefit payment deposited in the account during a two-month lookback period. If one is there, the bank follows the protection rules in section 212.6. If none is there, the bank handles the order the way it normally would.
How much of the account does the rule protect?
The protected amount is the lesser of two figures, according to the definitions in section 212.3: the total of benefit payments posted during the two-month lookback, or the account balance on the day of the review. A holder who received $1,900 in Social Security in each of the last two months and has $3,000 in the account would have $3,000 protected. With $9,000 in the account, the protected amount would be $3,800.
Section 212.6 says the bank must calculate the amount immediately, and the holder keeps full access to it. The holder does not have to claim an exemption first, and the amount is “conclusively considered to be exempt” from garnishment. No garnishment fee may be charged against it. A fee can be charged only if non-benefit money arrives within five business days after the review, and then only up to the size of that deposit.
The coverage comes from section 212.2, which lists Social Security benefits protected under 42 U.S.C. 407 and SSI protected under 42 U.S.C. 1383(d)(1), along with VA, Railroad Retirement Board and Office of Personnel Management payments.
When does the three-day notice go out, and what does it say?
Section 212.7 requires the notice when three things are true: a benefit payment arrived during the lookback, the bank set a protected amount, and the account holds more than that amount. The bank has three business days from the review date to send it, directly to the account holder or to a fiduciary who manages the account.
The notice must name the creditor, state the date the order was served and give the protected amount. It must also say whether any other funds are frozen under state law and whether a fee was charged. It has to explain the holder’s right to claim a further exemption for money above the protected amount, through exemption forms, the court or the creditor, and the right to consult an attorney or legal aid service. If every dollar in the account is protected, no notice is required.
Once the review is done, the bank cannot keep freezing benefit deposits that arrive later under the same order. A new or different order starts a new review.
Which orders skip the review, and is SSA’s own overpayment recovery covered?
The main exception is an order that carries a Notice of Right to Garnish Federal Benefits, which only the United States or a state child support agency can attach. In that case the bank follows its usual procedures instead of sections 212.5 and 212.6, according to the eCFR text of Part 212.
Social Security’s own collection of an overpayment is a different process. The agency’s overpayment page says that if a person does not repay within 30 days of the notice, it withholds 50% of the monthly benefit, or 10% of an SSI payment, until the debt is repaid. A waiver or appeal request filed within those 30 days stops collection until SSA decides.
Did the bank tell you which part of the account it protected?
When a creditor’s order reaches the bank, the dollar figure that matters is the protected amount, and the holder usually learns it only if the bank sends the notice. A holder who cannot tell how much of the Social Security deposit is shielded, or who finds the account frozen anyway, has little time to respond.
“The Bank Account & Debt Protection Kit” is a 75-page guide that explains the 2-month bank protection rule and lays out the frozen-account response step by step. Part 3, “Keeping Benefits Provably Exempt,” covers how to keep deposits traceable as benefits so an exemption is easy to show.
This article was produced with AI assistance and edited for accuracy against the sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
