A bank account that receives Social Security, SSI or VA money is not an ordinary account when a creditor goes after it. A Treasury rule tells banks to look at recent deposits the moment a garnishment order arrives and to leave a defined amount alone. The rule applies to money that arrives by federal direct deposit.

For many people the first sign of trouble is a frozen balance or a letter from the bank. Can a collector with a judgment freeze a Social Security deposit? Under the federal regulation, banks must protect up to two months of those deposits, though the exact figure depends on the account.

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What the Treasury rule requires of banks

The regulation sits at 31 CFR 212.2. It defines a garnishment order broadly as a writ, order, notice, summons, judgment, levy or similar written instruction from a court or a state or municipal body, and it also reaches an order to freeze assets in an account.

Covered benefits include Social Security Administration payments, which take in SSI through the cited section of the U.S. Code, and Veterans Affairs benefits. Railroad Retirement Board and Office of Personnel Management payments are covered as well, as long as they arrive by direct deposit.

How the two-month lookback is counted

The rule calls it a lookback period: the two months that begin on the date before the bank reviews the account. The review looks for benefit payments posted during that window, and the bank must run it no later than two business days after receiving the order and the information needed to identify the account holder, according to the electronic CFR text of Part 212.

If no benefit payment landed in those two months, the bank follows its ordinary garnishment procedures instead. The shield only attaches to federal benefits that were actually deposited.

Why the protected amount can be less than two months

The regulation defines the protected amount as the lesser of the benefit payments posted to the account during the lookback period or the account balance on the day of the review. Two months of deposits is therefore a ceiling, not a promise of two full months in every case.

A person who received one benefit deposit and holds a balance below it is protected only up to that balance. Someone whose balance holds both months of deposits is protected for the total of those two deposits. Money moved in from elsewhere or deposited as cash does not count as a benefit payment.

What stays open and what can still be frozen

Once the bank sets the protected amount, it must give the account holder full and customary access to that money and must not freeze it because of the order. The account holder does not have to claim an exemption first, and the protected amount is treated as exempt from garnishment.

Funds above the protected amount can be frozen under the bank’s usual procedures. A garnishment fee cannot be charged against the protected amount, although a limited fee is allowed for up to five business days if non-benefit money is deposited after the review.

The bank must send a notice within three business days of the review when benefits were deposited, the balance was above zero and funds exceed the protected amount. It has to list the order’s dates, the protected amount, any frozen amount, any fee and the account holder’s right to claim further exemptions.

Other rights when a balance looks wrong

A frozen or reduced balance can also be an error. Under Regulation E, a consumer who reports an account error to the institution within 60 days of the statement showing it can require an investigation, and the institution has 10 business days to determine whether an error occurred, the CFPB’s rule text says.

Old debts raise a separate question. The CFPB says that in most states the time limit for suing on a debt runs three to six years, and that a partial payment can restart the clock, according to its guidance on statutes of limitations. A court can still enter a default judgment if the debtor does not appear and raise the expired limit.

Does a garnishment order leave the last two months of Social Security reachable?

A garnishment order can arrive before anyone has checked what the lookback will count. If the bank’s review finds fewer benefit deposits than expected, or a small balance, the protected amount shrinks, and anything above it can stay frozen while the notice clock runs.

The Bank Account & Debt Protection Kit walks through the 2-month bank protection rule and the frozen-account response, so a person can see what the bank should have protected and what to say back. Part 3 covers keeping benefits provably exempt, and Part 6 covers judgments and garnishment.

Get the frozen-account response kit and the 2-month rule guide →

This article was produced with AI assistance and edited for accuracy against the sources linked above.