Your Stimulus Check Can’t Be Taken By Debt Collectors In This State
New York Gov. Andrew Cuomo signed legislation last week that will prevent private debut collectors from garnishing coronavirus stimulus money.
Not long after Congress passed the American Rescue Plan in March, some noticed that the law did not have a provision that kept private debt collectors from garnishing the bills $1,400 stimulus checks. When the CARES Act passed in early 2020, such garnishments were forbidden.
The stimulus checks cannot be garnished by unpaid federal debts or back taxes, although private debt collectors can collect medical bills, credit card debts, and other debts, providing that is ordered by a court order.
According to the text of the bill, payments will not be subject to reduction or offset for past-due federal or state debts, or by other assessed federal taxes that would otherwise be subject to collection, CNET said earlier this month. However, if you end up having any money missing from your third check and have to claim it on your tax return next year, that money could be subject to garnishment.
However, one state has taken steps to prevent that.
New York Gov. Andrew Cuomo signed legislation last week that will prevent private debut collectors from garnishing coronavirus stimulus money.
However, several other states have either blocked the garnishments or are trying to do so. Massachusetts Attorney General issued a guidance making the checks exempt from garnishment. Minnesotas governor did the same thing, through an executive order.
Your Third Stimulus Payment Can’t Be Seized To Pay Child Support
Under the CARES Act from March 2020, your first stimulus check could be seized by state and federal agencies to cover past-due child support. That rule changed for the second stimulus check, which couldn’t be taken if you owe money for child support. And like the second check, your third check cannot be taken to pay overdue child support.
According to the text of the bill, payments will not be subject to reduction or offset for past-due federal or state debts, or by other assessed federal taxes that would otherwise be subject to collection. However, if you end up having any money missing from your third check and have to claim it on your tax return next year, that money could be subject to garnishment . The best thing to do is to file your 2020 tax return as soon as possible, so the IRS has your most recent information on file.
People with children will benefit from other aspects of the bill outside of the third stimulus check. For example, updates to the Child Tax Credit increase the existing amount to as much as $3,600 per child. There are also some other tax breaks to take advantage of, including for child care.
Are There Federal Protections Against Debt Collectors Taking Your Stimulus Check
Unfortunately, there are no federal protections against private debt collectors seizing stimulus checks. Democrats attempted to pass protections in Congress, but Republicans blocked the bill and it did not pass. The last two stimulus checks were protected from garnishment, but private debt collectors can seize your $1,400 stimulus check.
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Californians: Debt Collectors Cant Take Your Stimulus Check
All around the country, Americans are receiving a new round of American Rescue Plan payments in their bank accounts only, in many states, to have the payments seized by debt collectors. Fortunately, Californians do not have to worry. A year ago, in April 2020, Governor Gavin Newsom issued an executive order to prevent debt collectors from seizing payments under the CARES Act or any other later pandemic relief payments like the ones the federal government is sending out now.
Governor Newsoms order was issued to protect the CARES Act payments from March 2020, but it also explicitly shields from garnishment or levy any other federal-, state-, or local-government financial assistance made available to individuals in express response to the COVID-19 pandemic. The only exceptions are for child and spousal support, and criminal restitution.
In Congress, Senators Ron Wyden and Sherrod Brown attempted to pass federal legislation to protect the payments from being garnished by private debt collectors, but the bill was blocked
The March 2020 $1200 CARES Act payments were protected from state and federal government garnishment, and the $600 payments from December were shielded against all creditors. Unfortunately, because of quirks in the reconciliation process used to pass the American Rescue Plan, the most recent payments did not receive the same protection.
California, to the relief of millions of its residents, has already done so.
How Can I Get My First Stimulus Check

For both stimulus payments, the government used tax information from 2018 or 2019 tax returns. If you did not file taxes in either year, and did not report income information on the IRS site to receive your first stimulus payment, you should claim your payments through the Recovery Rebate Credit on your 2020 taxes.
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Can A Debt Collector Seize Your Stimulus Check
Casey O’Brien
The third, $1,400 stimulus checks currently being distributed to Americans have already provided important relief to many people who are struggling to pay their expenses during the pandemic. Although the U.S. economy is recovering, there are still record numbers of people unemployed or facing wage cuts.
Since $1,400 will go a long way to help cover groceries or rent, those with outstanding debts may be wondering if private debt collectors can take their checks. Hereâs what you need to know about debt protection for your stimulus checks, and whether your check can be âgarnishedâ by debt collectors.
The Stimulus Check Legal Language Hole Left Open
New York Attorney General Letitia James asked that no private debt collectors should be able to seize federal stimulus checks. Many Governors of various states are working in conjunction with the State Attorneys General. They are attempting to plug the hole the CARES Act unwittingly left open within the language of the $2 trillion Coronavirus stimulus legislation.
The hole left open doesnt prevent private debt collectors from seizing money for unpaid debts. Whats more, if you owe alimony or child support, you will probably never see a stimulus check in this life, or maybe even your next one as your stimulus check will be going to your ex-spouse and children.
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Good Question: Can Your Stimulus Check Be Taken Away By Debt Collectors
CHARLOTTE, N.C. – Millions of Americans will soon receive their $1,400 stimulus check.
Last week, the American Rescue Plan was passed, which includes direct payments for most people. Theyll go to individuals earning up to $75,000 per year or married couples who earn up to $150,000.
A viewer, who wants to remain anonymous, asked this:
Can bill collectors take our stimulus check this time?
The answer is Yes.
Your check can be collected if you have unpaid debts.
However, this only applies to certain types of debt.
There are three main kinds:
- IRS tax debt.
- Other government debt – so things like child support or private debt.
- Things like credit card debt or medical bills… and in some cases, private student loans.
These checks are not protected from private debt. So, a private collector could garnish it.
Why is this happening? Its because of the way this COVID relief package was passed.
Everything was authorized through a process called budget reconciliation.
Under this process, a funding bill only needs a simple majority to pass… instead of the usual 60 votes required.
Consumer and banking trade groups are calling on Congress to pass a bill that would prevent this.
Senator Ron Wyden is expected to introduce a bill but he hasnt yet.
If you have a Good Question, send it to us. Well try to get you an answer.
Use the hashtag #OYSTonight on Twitter or email .
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Can Debt Collectors See Your Bank Account Balance
While a creditor cannot easily look up your bank account balance at will, the creditor can serve the bank with a writ of garnishment without much expense. The bank in response typically must freeze the account and file a response stating the exact balance in any bank account held for the judgment debtor.
Read Also: When Does The Stimulus Checks Go Out
What Will Happen To Your Stimulus Payment In Bankruptcy
A new law effective December 27, 2020, protects stimulus checks in bankruptcy. The Office of the U.S. Trustee has issued an opinion finding that the first three stimulus checks issued, along with tax and child credits, are not included in the bankruptcy estate. The new law clarifies that the trustee cannot include these funds for Chapter 7 means test qualification purposes or when evaluating a Chapter 13 plan payment amount.
There is a caveat, however. The law might not cover future stimulus payments under new stimulus laws, so be sure to discuss the current status with your bankruptcy lawyer.
Find out more about protecting your stimulus checks in bankruptcy. Also, consider learning how bankruptcy can help after a layoff or how to file for bankruptcy while quarantined during the coronavirus outbreak.
Private Debt Collectors Can Seize Your $1400 Stimulus Check To Pay Creditors
WASHINGTON Heres a warning for you: If youre set to receive the $1,400 stimulus payment, debt collectors will be able to come after your money if you have unpaid debt.
Under the $1.9 trillion American Rescue Plan, debt collectors will be able to garnish your stimulus check, which was blocked in the language of the first two stimulus relief bills.
Lawmakers in the U.S. Senate were unable to include language that explicitly protects people from debt collectors in the latest stimulus relief bill because of the budgetary rules under which the bill was approved.
Senate Finance Committee Chair Ron Wyden issued a statement on the matter.
The two previous relief payments were shielded from predatory private debt collectors. While Democrats intend to protect the third payment from private debt collectors, Senate rules did not allow us to include that protection in the American Rescue Plan. I will be introducing standalone legislation to ensure families receive their much-needed relief payments, Wyden said.
The American Bankers Association urged lawmakers to provide such protection before the passage of the package.
Biden signed the American Rescue Plan one of the largest stimulus measures in U.S. history in a brief Oval Office ceremony Thursday.
Nearly 160 million households are expected to get payments, according to White House estimates.
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Can Debt Collectors Take My Stimulus Check
If you want to know if debt collectors can take your stimulus check, youre not alone. One in three adults or approximately 71 million Americans may not get their COVID-19 stimulus checks due to debt collections. If you owe money for spousal or child support, private student loans, credit cards, or medical bills, your CARES Act, COVID-19 stimulus check, may be at risk from debt collectors.
The CARES Act $2 trillion in stimulus money was intended to provide you with financial relief to help you recover from lost jobs, lost wages, or everything unexpected youve been impacted by during the COVID-19 pandemic. To be fair, the government took several steps to ensure there was some federal protection against bill collectors they knew would be attempting to get your stimulus check.
But the stimulus checks, debt collectors, and the laws are all squaring off against each other, so you may be wondering if you do owe a debt will you receive your stimulus check? Or will the debt collectors get their hands on it first? Read on and find out relevant information explained in detail below.
Debt Collectors Can Seize Your $1400 Stimulus Check Heres What To Do To Keep Your Cash

- 22:37, 15 Mar 2021
AMERICANS who owe money might see their stimulus payments seized by debt collectors, thanks to lawmakers’ failure to protect the third round of stimulus payments from garnishment.
Any private debt collector with a judgment against you can garnish your $1,400 stimulus payments, financial experts say, adding credit card and medical debt are the two most likely to be collected by debtors.
The latest $1.9 trillion stimulus package, which was signed into law last Thursday, did not protect the latest round of stimulus checks from being garnished, meaning many financial experts are advising Americans who might owe money to quickly withdraw those funds.
“If they think they’re at risk of garnishment, they should watch their account, and take out the money immediately,” National Consumer Law Center associate director Lauren Saunders told Yahoo Money.
“It would be terrible if money that Congress authorized to help feed families, take care of people who are struggling,” she added, “was grabbed by debt collectors to pay ancient debts.”
“That’s not why we’re enacting this extraordinary relief.”
About 158.5 million households in the country are expected to see a stimulus check hit their bank accounts or mailboxes.
However, lawmakers are working around the clock to prevent the garnishment of the third round of stimulus payments. The first one was also not protected from garnishment but the second one was.
Also Check: Is There A Third Stimulus Check Coming
Debt Collectors Can Take Your Stimulus Check
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Posted March 15, 2021 5:40 p.m. EDTUpdated March 18, 2021 8:35 p.m. EDT
An important warning for anyone with unpaid debts as stimulus checks are being sent from the $1.9 billion American Rescue Plan — debt collectors can take advantage of your extra income.
Durham attorney Edward Boltz said debt collectors won’t just go in and take your money, but there are some exceptions.
“Unfortunately, because of the negotiations in Congress, they weren’t able to put those protections in the bill like they have for previous stimulus checks,” said Boltz.
He added that the debt collection depends on where you are with your bills and debt.
“For most debt, credit cards, medical bills, generally, they cant just go in and seize your bank account,” said Boltz. “They first have to start a lawsuit against you and get a judgment where the court says, Yes you do owe this money.'”
Boltz said Americans who signed up for direct deposit are most vulnerable.
“Those are the ones that are most likely for it to hit their bank account and immediately be seized for whichever credit. If you’re getting by mail, it’s less likely to happen,” said Boltz.
He added to check with your county to see if you have any judgments. In North Carolina, those can last as long as 20 years.
Debt Collection And Your Stimulus Check
Unlike some government payments — such as Social Security and disability benefits — your stimulus check is not shielded from all debt collectors by federal law.
Cash you owe to federal or state authorities can be seized only to pay child support. But the CARES Act does not protect you from private debt collectors, nor will it stop a bank from putting that money toward existing fees or overdrafts.
Several big banks have promised not to use stimulus checks in this way, but debt collectors have made no such promises. If you have a court judgment against you, your stimulus check could be taken directly out of your account, which is also called garnishment. Courts can also order that your account be frozen. That’s why a number of states have put their own legislation in place to protect the hardest-hit.
To be clear, if you owe money but there are no court judgments against you, debt collectors cannot take money out of your account. Make sure you check your credit reports regularly so that you are not caught unawares.
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Yes Your Third Check Might Be Seized To Pay Certain Debts Here’s Why
Under the bill governing the second stimulus check, your funds could not be garnished to pay debts like child support, banks or private creditors. However, part of this rule changed with the third check.
The bill authorizing the third payout was pushed through using a process called budget reconciliation. Congressional Democrats used this legislative tool to more quickly pass the new COVID-19 relief bill and the third stimulus check that comes with it, since it allowed them to pass it with fewer votes. But because this process was used, the third checks aren’t protected from all garnishment, although lawmakers are moving to fix this now.
There are three types of unpaid debt that could be paid through garnishment: unpaid IRS tax debt, other government debt like child support payments or private debt, according to Garrett Watson, a senior policy analyst at the Tax Foundation. Your third stimulus payment will be protected from outstanding tax debt and child support, but not from private debts, such as debt accrued due to a civil judgment, ranging from civil damages to consumer debt in default, Watson said.
Several banking groups sent a letter to Congress on March 9 asking lawmakers to pass stand-alone legislation to prevent the third check from being garnished for private debts.
Private Student Loans Credit Cards And Other Debts
With some rare exceptions, private lenders, creditors, and debt collectors including holders of private student loans, credit cards, and medical debt cannot forcibly take someones money or property without first suing them in court and obtaining a judgment against them. A court judgment can then give the lender or debt collector more powers to pursue a debtors income or property. But what they can do with a judgment can vary significantly from state to state.
Even with a court judgment, a private lender or debt collector is unlikely to have any power to directly intercept government payments, like a stimulus check. But most states provide lenders and debt collectors with the power to put a lien or attachment on a bank account to satisfy an unpaid judgment. And funds deposited into a bank account that is subject to a lien or attachment including money from a stimulus check could be taken by the debt collector in those circumstances.
Some states have enacted specific prohibitions against seizing government stimulus checks and other government benefits to satisfy an unpaid judgement. So whether this is legal would depend on where you live, where the judgment was entered, and whether your applicable state law has any relevant prohibitions or protections.
Also Check: What States Are Giving Stimulus Checks 2021