If a court officer or a creditor has seized money in your bank account AND you can prove those funds came from social security payments or other protected payments, a state court judge may well order the funds given back to you.
Even after it has been paid to a debtor, money obtained from social security, unemployment compensation or any local public assistance benefit such as the aid to dependent children program, or workers compensation benefits, is exempt from the claims of creditors. It is also exempt from execution, levy, attachment, garnishment or other legal process, including the operation of any bankruptcy or insolvency law.
New Jersey has created an additional exemption for “old age assistance.” All amounts paid as old age assistance are exempt from any tax levied by the state or by any subdivision of the state, and are also exempt from levy and sale, garnishment, attachment, or any other process whatsoever and shall be non-transferable in any form. In case of bankruptcy these monies do not pass to the trustee or other person acting on behalf of the creditors of the aged needy person.
Both New Jersey and federal law permit the tracing of exempt funds when co-mingled in deposit accounts with otherwise non-exempt funds. Tracing the funds in a debtor's bank account to exempt funds is expressly authorized under New Jersey Law. If traceable to an exempt source of funds, the funds in the bank account are, themselves, exempt. Traceable funds deposited into a judgment debtor/beneficiary's bank account do not lose their exempt character.
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