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Apply Funds From SS Deposit to Charged-Off Acct?

Can a bank apply funds from a Social Security direct deposit to a charged-off account?

Randy Carey



John Burnett

That would be an offset, and setting off against Social Security funds (and certain other federal benefit payments) is illegal.

Accepting the direct deposit into an overdrawn account that is open is not considered an offset, and is acceptable. But once an account has been closed and charged off, it cannot be reopened (the deposit contract no longer is valid) to accept the deposit.

First published on 01/12/2015

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