(welfare), alimony or child support, unemployment benefits, disability benefits, public or
private pensions and workers’ compensation benefits. Exemptions generally do not apply
to business accounts.
We frequently cannot tell whether or to what extent funds in your account may be exempt
from collection, and in many states only you can ask the court to release your funds. If
you think that your funds that have been held or taken may be exempt, you may want to
immediately contact the attorney for the judgment creditor and advise him/her of your
belief. If you believe that you need legal advice, you will need to consult your own
attorney, or a Legal Aid or Legal Services attorney (if you qualify for such assistance).
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Whether any particular funds in an account are exempt often requires a fact-specific and deposit-
by-deposit analysis, for which a generalized communication or notice is not well-suited. In
addition, a bank may not have access to all of the relevant information necessary for the analysis.
Hence, we believe the better approach is for the accountholder to consult with his or her own
legal advisor if he or she believes that further advice would be useful regarding the potential
exempt status of the funds in the account.
Recommended Practice: Promptly determine, as feasible, if an account contains only
exempt federal benefit funds such as SSA or VA benefits.
We agree with the recommendation, but suggest that it should be clarified to require reasonable
efforts to identify direct deposits of federal benefit funds, but not check deposits of such funds.
In addition, the recommendation should acknowledge that banks should only be required to look
at transaction history for a reasonable period prior to the garnishment date. We note, however,
that many banks may not even have the systems capability to readily identify direct deposits of
exempt federal benefits. Banks also need better guidance from the Social Security
Administration, the Department of Veterans Affairs and the other federal agencies that make
these benefit payments on how to identify exempt federal benefit payments through ACH code
information.
When Chase receives a garnishment order, a Chase employee identifies all accounts of the
judgment debtor and reviews the account history for the previous 90-day period. We attempt to
identify direct deposits of Social Security benefits and veterans’ benefits by reference to the
ACH code number and description, if any, accompanying the direct deposit.
We associate ACH code numbers 303, 310 and 312 with payments issued by the Social Security
Administration and ACH code number 220 with payments issued by the Department of Veterans
Affairs, but we understand that these numbers refer to the Regional Center issuing the payments,
and do not necessarily indicate that the payments are exempt Social Security or veterans’
benefits. Therefore, we have no reliable method of identifying direct deposits of exempt federal
2
The language in this Chase notice is very similar to the language required in the levy notice that judgment
creditors are required to send to judgment debtors under New York state law. NY CPLR §5222.
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