Yes, we believe your bank may use all of the customer’s social security funds to bring her overdrawn account current.

The Social Security Act prohibits social security benefit payments from being “subject to execution, levy, attachment, garnishment, or other legal process or to the operation of any bankruptcy or insolvency law.” However, federal courts have held that a bank does not violate this prohibition by setting off account overdrafts against deposited social security benefits. We are not aware of any law or case that limits this right to only half of a customer’s social security deposits. 

For resources related to our guidance, please see:

• Social Security Act, 42 USC 407 (“The right of any person to any future payment under this title shall not be transferrable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process or to the operation of any bankruptcy or insolvency law.”)

• Wilson v. Harris N.A., 2007 WL 2608521, *9 (N.D. Ill. 2007) (A bank does not violate the Social Security Act “by collecting an overdraft fee from funds on deposit, whenever those funds originated from a monthly Social Security payment. . . . Notably, other courts have concluded that § 407 [of the Social Security Act] does not prohibit a bank from using Social Security funds to pay overdraft fees pursuant to a voluntarily-entered account agreement.”)