WSJ Feature: The Debt Collector vs. The Widow

The Wall Street Journal is featuring a consumer-focused piece on a widow, Viola Sue Kell, and her unfortunate experience with a collection agency and Social Security.

Featured on the front page of the Journal‘s Weekend Edition, the story details the nebulous legal black hole surrounding veterans’ and social security benefits in relation to collection agencies.

Federal law says that collection agencies cannot take Social Security and veterans’ benefits.  However, there currently exists no established process for enforcing this.  In the case of Kell, she had her Social Security benefits – her only income, according to the story – direct deposited into her account.  The bank does not designate the funds as Social Security funds.  Collection agencies do not make a practice of checking (and, since again, the banks aren’t helping, what good would it do?).  This makes it difficult for consumers to protect funds that should already be protected.

Consumers can file a claim with a debt collector to have any funds that came from Social Security or veterans’ benefits exempted.  Social Security, however, does not tell recipients this.  And banks, which reap a lot of extra cash when accounts are frozen and checks bounce, aren’t in a hurry to notify either.

While the story has the trappings of a typical sad-sack consumer story, the list of bureaucratic areas with no supervision is astonishing, to say the least.  The full story can be read here.