Bank just suspended my account! Help! ARC did it!

@gillieb

When you wrote your third post on February 27, 2012, you added some additional information that you neglected to include in your first 2 posts. And that changes the whole perspective of your situation. You stated that in addition to receiving welfare, your other source of income is family maintenance. I don't know which Province you reside in but here in Ontario, that would be a distribution from the Family Responsibility Office. In other words, a person's salary or wages would be garnished for spousal and child support by the FRO ( a government agency and pursuant to a court order ) and then remitted directly to the ex-spouse. In the hands of the ex-spouse, this amount is treated as taxable income and is NOT EXEMPT from garnishment. While in your case, a payment received from family maintenance will reduce any monies received from welfare, nevertheless, it is NOT considered to be welfare and therefore these funds may be legally seized either by a court order or by a bank's "right-of set-off".

It is a well-established fact that in all Provinces and Territories, social assistance payments which include welfare and government disability payments ( pensions ) are exempt from garnishment and the "right of set-off" by any creditor including any government or agency thereof. As I previously stated in my post of February 27, 2012, the only exception to this rule is the government agency that made the welfare payment if funds were obtained by fraud or if there was an overpayment. Other than these 2 exceptions, social assistance payments are totally exempt from seizure for any reason including the CRA for outstanding and unpaid income taxes.

If social assistance payments are directly deposited into the recipient's bank account by the government payor, the funds in the bank account do not change their original character. Therefore, these funds cannot be garnished or be subject to the "right of set-off". However, if the social assistance payments are received directly by the recipient and then deposited into the bank account, this will TAINT those funds making them subject to garnishment or the "right of set-off". Even if the social assistance payments were directly deposited to the recipient's bank account by the government payor and the recipient deposited just $1 to the bank account, again, this will TAINT those funds. The fact that both welfare payments and family maintenance payments were both deposited to the same bank account, and even if they were both made by direct deposit, this now taints the bank account and makes it fully available for garnishment or the "right of set-off".

Sadly to say, the CIBC was fully within their legal right to seize these funds and apply this amount to any outstanding and unpaid student loan. In his post on Februsary 28, 2012, "Johnny" states in his response to you regarding your dilemma "Write a letter or fax it to Anuj Vohra and Clarence Lane at CIBC's collection office in Toronto. Outline the situation and create a paper trail." In my view, ignoring any moral issue, this would be a colossal waste of time and effort as the CIBC are well within their legal right to exercise their "right of set-off".

The moral to this story is if one is in receipt of social assistance payments, arrange for them to be paid by direct deposit and only to a bank account that receives social assistance payments. Income received from any other source either by direct deposit or otherwise MUST be deposited into a separate bank account.