$ 1,400 stimulus checks could be garnished. Some want to change that
As the government pushes millions of $ 1,400 worth of stimulus checks out the door, some Americans may show up empty-handed.
The reason: overdue unpaid debts.
The problem caused Capitol Hill lawmakers to get caught in some kind of crossfire on Thursday as to whether or not these checks can be garnished as some wanted to change policy.
It did after the Treasury Department and IRS announced on Wednesday that 90 million checks have been made out of direct deposit to date.
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Struggling households would postpone paying these bills if necessary
“We know that predatory debt collectors are already lining up to try to cut these checks,” Senator Sherrod Brown, D-Ohio, said in the Senate Thursday.
To remedy this, Brown called for a bill to be passed along with Senator Ron Wyden from Oregon, Senator Bob Menendez from New Jersey, and Senator Chris Van Hollen from Maryland.
However, efforts to get this bill through have been blocked by Senator Pat Toomey, R-Pa.
Toomey argued that it was too late to change the legislation and that changing the rules could protect husbands or fathers who refuse to pay child support or child support.
Under the terms of the American Rescue Plan, the money cannot be garnished for unpaid federal debt or back taxes.
According to Christine Hines, legislative director at the National Association of Consumer Advocates, the $ 1,400 stimulus checks can be garnished for unpaid personal debts such as medical bills or credit card debts, provided they are subject to a court order.
Attachment is a court order that allows funds to be removed from an account.
Generally, when banks have a court order to seek money they must comply, Hines said, although they can take steps to mitigate overdrafts or other fees that account holders pay.
We still need Congress and the Treasury to work together to protect the stimulus payments.
Legislative Director, National Association of Consumer Advocates
Still, a group of banking and consumer organizations, including the American Bankers Association, sent a letter to Congress earlier this month urging them “to quickly pass standalone garnishment laws to ensure American families get these benefits as intended.” receive”.
This week, the Consumer Financial Protection Bureau also said it was concerned that stimulus payments would be taken over by financially vulnerable Americans due to overdue debt, overdraft fees, or other liabilities.
“When payments are seized, many financial institutions have pledged to return the funds promptly to those who are supposed to receive them,” said Dave Uejio, acting director of the CFPB, in a statement.
“We appreciate these efforts, recognizing the extraordinary nature of this crisis and the extraordinary financial challenges facing so many families across the country,” he said.
However, some payments may already be subject to attachment.
“It depends on how fast you move,” Hines said of the creditors.
If you think your payment could have been made, the first place to look is your bank account, she said. You may also want to contact your financial institution for more information.
You can also keep track of when your Stimulus payment should be delivered using the Get My Payment IRS website.
Ultimately, stimulus checks are a government benefit and should be exempt from attachment, Hines said.
“We still need Congress and the Treasury to work together to protect the stimulus payments,” Hines said. “I don’t think it’s too late.”