Debt collectors can SEIZE your $1,400 stimulus check – here’s what to do to keep your cash
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.
Debt collectors can also garnish the payments for overdue student loan debt, but the IRS could not garnish the payments for back taxes or child support offsets.
Most read in News
Garnishment varies state to state, with some states offering their residents protection from debt collectors.
Usually, a debt collector serves the garnishment order on the bank, causing the bank to freeze the account and give the consumer notice.
The consumer must then go to court to contest the order or assert an exemption. Unless the court lifts the order, the bank will give money over to the collector.