Answers about Garnishments

After my bank froze my account, some of my checks were returned unpaid. May the bank impose an insufficient funds or “NSF” fee for these returned checks?

Generally, if permitted by your deposit agreement, the bank may charge these fees. However, if you receive Federal benefits payments by direct deposit, the bank may be required to protect at least some of that money automatically, so that money should not be frozen.  If your Federal benefits are not automatically protected, your account may be frozen and checks may be returned.

If you believe the bank charged you an insufficient funds fee when it should have automatically protected funds in your account, you should contact the bank.  You can also file a written complaint with the OCC’s Customer Assistance Group.

If your account includes other exempt Federal benefit payments that are not automatically protected, such as a Federal benefit that you deposit by check; ask your bank if it will refund – or not charge – fees in connection with a freeze on the account.

June 2011