VA Disability? Financial Problems? Direct Deposit? You're Screwed

Supposedly your VA disability payments, along with your Social Security, are secure from garnishment by bill collectors.

Supposedly.

But in a case out of Alabama, Mrs. Viola Sue Kell got her bank account frozen while debt collectors garnished her money.

All of which was from Social Security disability payments. Illegal, yeah, but apparently it happens with disgusting -- and alarming -- regularity.

Larry Scott over at VA Watchdog has the full story, and it's not a pretty one.

Banks, who ought to know better, don't tell the collectors that what they are doing is illegal. They just blithely go along with it, apparently because it's such a money maker for them. They can charge a fee -- to the account holder -- of $100 just for putting the garnishment on the bank account. And then, for the unwary customer who goes on writing checks for daily living expenses, they can charge an additional overdraft fee for every check that they bounce.

Jeez, what a cash cow this could be. No wonder they won't tell their customers.

So evidently this is a process that will continue. If you have a VA disability or Social Security payment that is deposited directly into your bank account -- and these days who doesn't opt for that convenience? -- you should be aware that if you have any financial problems that could result in your assets being frozen and garnished, you really need to consider stopping that direct deposit and go back to getting hard-copy checks snail-mailed to you.

It'll be inconvenient as hell, but at least you'll keep getting your money.