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WASHINGTON — The Obama administration on Wednesday proposed rules aimed at closing a legal loophole that debt collectors have used to seize Social Security and veterans’ benefits from bank accounts.
The Treasury Department and other agencies published the proposed new rules on garnishment of government benefits in the Federal Register, opening them to a 60-day public-comment period.
Federal law has long protected Social Security and veterans benefits from most creditors, with a few exceptions. But creditors have been seizing them anyway by getting court orders to freeze and garnishee bank accounts that receive the benefits through direct deposit.
