Did you know that debt collectors can seize your stimulus money to satisfy debt payments? By now we’re well aware that as part of the CARES Act, the IRS is sending out stimulus checks. You may have received your payment. You may still be waiting. However, if you have credit card debt, and particularly if a debt collector is involved, you could run into problems getting your stimulus check.
Debt Collectors Could Go After Your Stimulus Check
As a general rule, debt collectors are prohibited from garnishing payments from the government. These are payments such as Social Security, disability and veterans’ benefits. However, according to USA Today, the Coronavirus Assistance, Relief and Economic Security (CARES) Act does not specify stimulus payments as exempt.
States have contacted the Treasury Department asking Secretary Steven Mnuchin to ensure debt collectors can’t satisfy debts by using stimulus check funds. Some states, including California, Delaware, Massachusetts, Ohio, Texas, and Washington, D.C. have newly created protections in place. This prevents this from happening to their residents.
If you’re a resident of other states, however, your stimulus money remains available to debt collectors. Jay Fleischman, is an attorney at Money Wise Law who helps people with debt problems. He offers this advice: “Understanding the laws in your state, as well as the procedures needed to trigger the necessary exemptions, can go a long way in knowing your level of exposure.”
“If possible, call the debt collector to work out a settlement or payment plan so you can protect your money as your financial situation improves,” Fleischman said.
During these difficult times, many people are being particularly challenged by debt and paying for basic goods and services. Having the stimulus payment funds helps a lot. It’s good, if possible, to avoid having debt collectors garnish your stimulus money. Knowing how to protect yourself from losing your stimulus check to credit card debt is important. Remember to reach out to your bank. See what relief and support they offer due to the coronavirus. Support is available!
- Bank by Bank Credit Card Debt Relief and Support Guide
- Your Guide to Stimulus Check Information
- Guide to COVID-19 Information and Updates
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