Can a Debt Collector Take My Stimulus Payment?

If you are like many Americans in and around Chicago, you are struggling to pay your debts as a result of the COVID-19 emergency. You may have received your government stimulus payment in recent weeks. Depending on your income, you could have been eligible to receive a payment of up to $1,200, and up to $500 for each dependent child. Whether you already received your stimulus payment or you are still waiting to receive it, you may have concerns about whether a debt collector can take that money from you if you have outstanding debts. It is an important question to consider given that Congress is in talks about additional stimulus payments for Americans suffering financially as a result of the coronavirus pandemic.

So, can a creditor or debt collector take your government stimulus payment? In short, maybe. According to a recent article in USA Today, stimulus checks are not “explicitly off-limits to debt collectors.” As a result, you could have a stimulus payment garnished.

Amount of Money in Stimulus Payments
The CARES Act provides $1,200 for individuals earning $75,000 or less, and $2,400 for a married couple filing jointly with earnings of $150,000 or less. And, as mentioned above, an additional $500 for every dependent minor child. Many people received their direct deposits in April, and others have continued to receive their stimulus payments through May. Yet many Americans who are eligible for the stimulus have not yet received their checks. And, as the House and Senate discuss future stimulus payments, it is important to consider the ways in which stimulus payments could be subject to seizure.

To be clear, the CARES Act did not have any requirement that stimulus payments be excluded from debt collection. State Attorneys General across the country wrote to Treasury Secretary Steve Mnuchin about the “loophole” in the CARES Act. The letter said: “Unfortunately, in what appears to be a legislative oversight, the CARES Act does not explicitly designate these emergency stimulus payments as exempt from garnishment, as similar government payments (such as Social Security, disability and veterans’ benefits) are.” The letter further explained: “As a result, there is a risk that stimulus payments may be garnished by creditors or debt collectors, which would undermine the purpose of the CARES Act.”

If a debt collector or creditor has garnished your bank account, having a stimulus payment deposited through direct deposit.

Avoiding Loss of Your Stimulus Payment to Debt Collectors
A number of state attorneys general indicated that state-specific protections could prevent emergency stimulus payments from being seized by debt collectors. Several attorneys general also indicated that a simple revision of the definition of the stimulus payment to a “benefit” payment could prevent the money from being seized by creditors.

In the meantime, if you are concerned, what can you do? You can request a paper check and can cash it without going through your bank account. If a stimulus payment is deposited into your account through direct deposit, you can immediately go to an ATM and withdraw the cash. However, as the USA Today article underscores, both of these options require leaving the house and potentially being exposed to coronavirus health risks.

Contact a Consumer Protection Lawyer in Oak Park
If you have questions about your rights as a consumer or debtor, an experienced Oak Park consumer protection lawyer can assist you. Contact the Emerson Law Firm to learn more.


See Related Blog Posts:
Could Consumer Bankruptcy Be an Issue for Congress?
Reasons Why Filing for Bankruptcy Sooner Could Benefit You in the Long Run





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