Credit union illegally seizes Social Security benefits

When Missourians suffer from physical illness, they sometimes have difficulties at work and may be forced to quit their jobs. Thankfully, Social Security disability benefits provide assistance to people who face illness combined with the loss of a job and other obstacles.

When people receive Social Security disability payments, financial institutions are forbidden from seizing it. One credit union was apparently unaware of this fact, and as a result, it was forced to pay $200,000 to a member who happened to be a former employee. Shortly after the woman left her job at the credit union, she applied for Social Security disability benefits, which were likely needed to cover medical expenses; the woman suffers from multiple sclerosis.

Although the woman had planned for the Social Security payment of nearly $14,000 to be deposited into an account at another financial institution, it was deposited into her account at the credit union earlier than she had expected. Because the woman and her husband had defaulted on a credit union loan, the credit union took the funds to repay the loan. The woman allegedly warned the credit union president that federal law protects Social Security payments, making it illegal to seize them; however, the he ignored her admonitions and refused to return the money.

Ultimately, the woman sued the credit union, and the court ordered the credit union to pay three times the amount that it had initially seized. Unfortunately, because the credit union said it intends to appeal the court’s decision, it may be some time before the woman receives any compensation. People who have been denied access to their Social Security disability benefits may want to talk with an attorney.

Source: My Record Journal, “Credit union loses case over disability benefits,” Andrew Ragali, August 21, 2013

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