Covid-19 has brought immense stress to the nation in the form of a pandemic. Unfortunately debt collectors are unbothered and may see the pandemic as an opportunity to seize or levy funds from consumers already in a desperate situation.
The Cares Act passed in response to the Covid-19 pandemic authorizes stimulus payments to individuals and families of $1200 per adult and $2400 per couple allowing an additional $500 per dependent child under teh age of 17. Families of four with two children under 17 receive $3400. The payment is phased out for singles with adjusted gross income above $75,000 ($150,000 per couple)
If the IRS has the taxpayer’s direct deposit information it will deposit your stimulus check directly into your bank account. If the IRS does not have the taxpayer’s direct deposit information he/she will receive a paper check or a loaded Direct Express prepaid card. Though the Cares Act protects stimulus payments from state and local government seizure there is no such protection in the Act against private creditor and debt collector garnishment/seizure. In many cases, the consumer may not know that a default judgment has been entered against them that contains a garnishment order.
Luckily, some states and counties have issued orders preventing garnishment. The District of Columbia has issued such an order, District of Columbia Act 23-286, that applies during Covid-19 public health emergency and for an additional 60 days following the emergency. California has also issued such an order, the California Governor’s Executive Order N-57-20 (April 23, 2020). It is unclear whether such orders apply to the consumer’s own bank or credit union seizing the stimulus payment for late or misc outstanding fees, other loans, or overdrawn accounts. However, though a paper check may take longer to receive, consumers can cash a check without depositing it in any account.
The information included in this blog post is for informational purposes only and is not intended to be legal advice nor is it intended to be a substitute for legal counsel on any subject matter.
