Mr. J is a service-connected veteran with chronic severe depressive disorder with suicidal ideation. His wife is physically disabled from childhood polio. They are currently living in Connecticut, but Mr. J. moved here from California where his ex-wife and their now-adult daughter live. Mr. J. has never had sufficient income to pay his child support obligation in California. His current income is from veterans’ benefits and his wife is on Social Security disability. Before he was granted service-connected compensation by the VA, they both lived on about $12,000 a year. Recently, his entire bank account was emptied by a California child support garnishment, leaving them penniless, without any ability to pay their rent or buy food until their next checks come in.
This is not a hypothetical but a real story that just happened here in Connecticut. What has caused this problem?
There is a new Treasury Department rule that stipulates guidelines for financial institutions to follow upon receipt of a garnishment order. Those guidelines protect up to two months of federal benefits in the account to be garnished. This new rule is much like the one the Connecticut legislature enacted last year. However, the Treasury rule has a major exception: if the state child support agency attaches a Notice of Rights to Garnish Federal Benefits, the two-month protection of federal benefits does not apply. This means that people whose income is derived from Supplemental Security Income or Veterans Administration disability benefits can have their income garnished as happened to Mr. and Mrs. J., as described above.
Supplemental Security Income is the safety net that Social Security provides for those who have limited or no income, are disabled, and have not worked sufficient hours to be eligible for Social Security disability benefits. Veterans Administration benefits are those benefits paid to our disabled veterans.
The SSA and VA often make mistakes and have inconsistencies in their own databases. Banks, because they keep records of whether federal benefits were actually deposited, are better equipped to guarantee implementation. Taking this responsibility away from the banks imperils individuals who rely on their federal benefits for subsistence.
Now let us put this all into context. The states are seizing these deposits to collect arrearages on child support orders from current income of Social Security recipients who are age 62 and over. In most of these cases, the children are grown, the money is no longer needed for the care of minors, and the funds pulled from those deposits is going to the state for reimbursement, not to the person who had custody of the children.
Who are the people who will be affected by these rules and what will happen to them? They are, for the most part, the elderly whose only source of income is Social Security to pay for their rent, utilities, prescription drugs, and other expenses that allow them to live independently. We will be seeing many people who will suddenly become penniless and dependent on the community and the state for assistance. They will end up in nursing homes, hospital emergency rooms, and homeless shelters. Many of these people who are delinquent on their child support are people who did not seek the relief available to them while in prison or unemployed or suffering a substantial change in circumstances because they did not know they could or were incapable of pursuing it in the courts on their own. Many of them have mental and physical disabilities and were not aware of the need to do a modification.
There is no question that these now-elderly debtors have not discharged their parental obligations of paying child support orders for the benefit of their children and are in violation of court orders over a period of years. There is no question that there should be some way of reimbursing the states that have laid out the funds to care for their children when it was most needed. However, there needs to be a balancing of interests in determining how this is done. Impoverishing elders who can no longer work and have no other way of replacing income is not the way to solve this problem.
On the federal level, we recommend adoption of a process that would, prior to garnishment, allow notice to the depositor and an opportunity to claim a special needs exemption to protect a certain percentage of the funds if the only funds in the account are from Social Security, Supplemental Security Income, or Veterans Benefits similar to the bank execution statute we have here in Connecticut. On the state level, we urge that child support enforcement offices have rules against garnishing accounts when doing so will put the debtor at risk of impoverishment. •