Debt Collection and the Next Round of Stimulus Checks
As you might have read, President Biden recently signed the American Rescue Plan, which includes another round of stimulus payments to American households. Indeed, many Americans will be eligible to receive a $1,400 stimulus payment as part of the $1.9 trillion bill, a payment that millions of consumers need “for urgent expenses like food and housing,” according to an article in Fortune. Yet as that article underscores, debt collectors may be able to take this stimulus payment before it ever reaches the hands of consumers, marking a shift from the rules concerning the previous two rounds of stimulus payments. Debt collectors were not allowed to garnish stimulus checks sent through the CARES Act, but the American Rescue Plan is different due to the way in which the relief package was passed.
In short, you should know that a debt collector might be able to take your stimulus payment, and it is important to learn more about what that means for you and what steps you may be able to take to keep the stimulus money you need.
Why Debt Collectors Can Garnish the Next Round of Stimulus Checks
What makes the American Rescue Plan different such that debt collectors are permitted to garnish the next round of stimulus checks? According to Fortune, “the change in exemption comes because the relief package was passed via budget reconciliation, rather than as a stand-alone bill.” In passing the relief package this way, the Democrats backing the bill did not have to contend with “a possible filibuster from Republicans, but it created the opening for collectors.” Fortune describes that opening as “an Achilles’ heel” of the relief package.
Yet consumer advocates are pushing for Congress to change the way these stimulus payments are treated. For example, the American Bankers Association wrote a letter to congressional leaders emphasizing that the next round of stimulus checks should be exempt from garnishment as benefits so that struggling families do not have their payments garnished by debt collectors. Senator Ron Wyden (D-Oregon), who serves as chairman of the Senate Finance Committee, plans to file legislation to prevent the stimulus checks from being garnished by debt collectors. However, since some of the checks will begin going out to consumers as early as March 12, the legislation may not be quick enough to help some debtors.
What Can You Do to Prevent Debt Collectors from Taking Action?
Until Congress takes action to prevent debt collectors from garnishing stimulus checks, it may be difficult for consumers to prevent debt collectors from taking their payments. However, you should discuss potential options with a consumer protection lawyer.
If you are struggling with debt and are currently considering the possibility of consumer bankruptcy, you should know that both Chapter 7 bankruptcy and Chapter 13 bankruptcy come with an “automatic stay.” That automatic stay, as soon as you file for bankruptcy, prevents debt collectors from taking any additional actions against you to collect debt, including garnishments.
Contact an Oak Park Consumer Protection Lawyer
Do you have questions about managing debt or preventing garnishment? One of our experienced Oak Park consumer protection attorneys can assist you. Contact the Emerson Law Firm to speak with an advocate today.
See Related Blog Posts:
Can I Discharge My PPP Loan in Bankruptcy?
Pause on Veteran Debt Collection
In short, you should know that a debt collector might be able to take your stimulus payment, and it is important to learn more about what that means for you and what steps you may be able to take to keep the stimulus money you need.
Why Debt Collectors Can Garnish the Next Round of Stimulus Checks
What makes the American Rescue Plan different such that debt collectors are permitted to garnish the next round of stimulus checks? According to Fortune, “the change in exemption comes because the relief package was passed via budget reconciliation, rather than as a stand-alone bill.” In passing the relief package this way, the Democrats backing the bill did not have to contend with “a possible filibuster from Republicans, but it created the opening for collectors.” Fortune describes that opening as “an Achilles’ heel” of the relief package.
Yet consumer advocates are pushing for Congress to change the way these stimulus payments are treated. For example, the American Bankers Association wrote a letter to congressional leaders emphasizing that the next round of stimulus checks should be exempt from garnishment as benefits so that struggling families do not have their payments garnished by debt collectors. Senator Ron Wyden (D-Oregon), who serves as chairman of the Senate Finance Committee, plans to file legislation to prevent the stimulus checks from being garnished by debt collectors. However, since some of the checks will begin going out to consumers as early as March 12, the legislation may not be quick enough to help some debtors.
What Can You Do to Prevent Debt Collectors from Taking Action?
Until Congress takes action to prevent debt collectors from garnishing stimulus checks, it may be difficult for consumers to prevent debt collectors from taking their payments. However, you should discuss potential options with a consumer protection lawyer.
If you are struggling with debt and are currently considering the possibility of consumer bankruptcy, you should know that both Chapter 7 bankruptcy and Chapter 13 bankruptcy come with an “automatic stay.” That automatic stay, as soon as you file for bankruptcy, prevents debt collectors from taking any additional actions against you to collect debt, including garnishments.
Contact an Oak Park Consumer Protection Lawyer
Do you have questions about managing debt or preventing garnishment? One of our experienced Oak Park consumer protection attorneys can assist you. Contact the Emerson Law Firm to speak with an advocate today.
See Related Blog Posts:
Can I Discharge My PPP Loan in Bankruptcy?
Pause on Veteran Debt Collection
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