CUNA’s compliance staff was recently asked about a garnishment order for a member’s account that receives federal benefits. The credit union performed a 2-month account review, which determined the member did not have enough “unprotected funds” to honor the garnishment order, and the member contacted the credit union to request the order be paid in full using those funds.
Can the credit union do this?
Yes, as long as the request is in writing, and the written document is both dated and provided by the member after the credit union have been served the garnishment order.
This situation is considered a “safe harbor” in the Garnishment of Accounts Containing Federal Benefits Payments regulation, which protects federal benefits from garnishment.
A number of safe harbor provisions are included in the rule:
Additional details are available in a CompBlog post, which includes links to the regulation itself, and an NCUA regulatory alert on the topic.