A new treasury rule, effective May 1, 2011, will provide more protection to recipients of federal benefits whose bank accounts are subject to garnishment.

Judgment creditors are allowed to grab (garnish) money from your bank account in order to collect on a judgment. However, some types of federal benefits -- including Social Security, Supplemental Security Income, veterans benefits, and a few others -- are protected from garnishment.

The problem in the past has been that in practice, when banks got a garnishment order, they often froze all funds in the account (up to the amount of the debt), without regard to whether the funds were protected from garnishment.

Under the new rule, banks receiving garnishment orders must now determine if the bank account contains protected federal benefits that have been electronically deposited into the account within the previous two months. If the bank discovers that there are protected funds, it cannot include those funds in the account freeze.

To learn more about this new rule, and how to protect yourself from garnishment of your federal benefits, read more about this new rule protecting federal benefits on Nolo's Bankruptcy and Foreclosure Blog.