Paul was having both his Social Security retirement benefits and his veteran\’s benefits deposited directly into his checking account and had been for several years. Back in 2007, Paul was in the hospital for an extended stay due to a heart condition. While most of Paul\’s medical bills were covered, there was a gap leaving almost $18,000 in unpaid medical bills. Paul attempted to negotiate with the hospital that had taken care of him, but the hospital was not satisfied with the payments Paul was making and, through legal process, by getting a Court Order to freeze and then withdraw amounts from the account where Paul had his direct deposits made.
Issue: Does Paul have any recourse?
Answer: As a general rule, federal law protects Social Security and veteran\’s benefits from most creditors. There are a few exceptions, such as alimony, child support, unpaid federal taxes, and debts to other federal agencies. Nevertheless, since Paul had direct deposit into a general account where he had other savings, and then they were co-mingled with the Social Security and veteran\’s benefits, this allowed his creditor to collect from that account.