Federal law mandates that banks can’t take your Social Security to pay debts, but some banks are doing exactly that, endangering the ability of sick and dying elderly to pay for their health costs. WSJ reports:
The Cains, of Palm Coast, Fla., took out a $31,000 loan from a SunTrust bank to buy a Ford Expedition in 2005. But last summer, Mr. Cain was diagnosed with bladder cancer and soon was unable to work. His wife, Elna, tried to find someone to take over the $690 monthly payments but couldn’t, so she surrendered the SUV to the bank this January. After selling it at auction for $16,000, the bank told the Cains they owed it a balance of $15,703, which included late charges, repossession expenses and interest.
Mrs. Cain, 63, says she told the bank her husband’s cancer had spread and he was confined to a wheelchair. They lost their health coverage when he had to quit working. A Vietnam vet, Mr. Cain has applied for veteran’s benefits, but isn’t yet receiving them.
He also applied for Social Security disability. On March 14, both his first disability check, $1,343, and Mrs. Cain’s $1,161 regular Social Security hit their SunTrust account through direct deposit.
The same day, SunTrust took $1,924 out of their account. The next week, the Cains got a letter from SunTrust Recovery Department, dated March 15, thanking them for their payment.
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Banks defend this practice by pointing to “set-off” clauses in the customer agreements, which allow them to collect money owed from an account. While this makes sense for routine charges, it seems devious for banks to use it to circumvent the federal laws against raiding citizen’s Social Security benefits. — BEN POPKEN
Banks Tap Social Security Funds Too [WSJ] (Thanks to Chris!)