Banks can take your Social Security!

Betcha didn't know this!

If you collect Social Security or government disability benefits, your bank can just take these benefits from you. They can do this if someone says you owe them a debt (even if the debt is unproven).

There are federal rules designed to prevent this scam. But the rules have a loophole big enough to drive a blimp through.

This loophole has also let creditors go through banks to seize stimulus checks and even veterans' benefits.

How does this loophole work? Welp, federal law says creditors can't take benefits like those mentioned here. But it doesn't say how money that is directly deposited is protected - a gap that creditors exploit.

You might be able to avoid this rip-off by not having your check directly deposited. But that can be a hassle.

Creditors have gone through banks to seize benefits from folks over unpaid medical bills and other debts. Bank of America - which squandered bailout money on bonuses for its execs - froze the account of a disabled couple over a debt they allegedly incurred 15 years earlier.

Worse, banks charge their own fees on customers who have their accounts frozen by creditors! So customers remain perpetually in debt. One family wasn't even aware their account was frozen, so their account became overdrawn, and they ended up incurring fees of $8 for each day that the account had a negative balance.

Members of Congress are urging the Treasury Department to close the loophole and end this high-handed pillaging. But more must be done. Folks who have already been scammed must be repaid their money that was taken - and more.

(Source: http://online.wsj.com/article/SB124361324245066727.html)