There is good news for millions of Americans with financial hardship. The next round of stimulus payments is on the way. Stimulus money is showing up in bank accounts and checks will soon be arriving in the mail. However, there is also some bad news. Unlike the first two rounds of stimulus, this round is not safe from creditors. In other words, this money can be levied against, or garnished, by your creditors.
Yes, this money can be garnished by your creditors. This has been reported in many news stories. One CNET article says, With the first stimulus check, private banks and creditors were able to seize your payment to cover an outstanding debt. [Note: This refers to overdraft fees owed to specifically to the bank into which the funds were deposited.] …. With the second stimulus check, your payment was protected from bank garnishment and from private creditors and debt collectors, according to the text of the law. The third check is also supposed to be protected from bank garnishment, though not from private creditors and debt collectors.
The bill authorizing the third payout was pushed through using a process called budget reconciliation…. But because this process was used, the third checks aren’t protected from all garnishment. 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.
What, MY money can be taken from me?
Yes, your stimulus money can be subject to garnishment. However, it is important to know that a creditor cannot garnish your stimulus money, or any other funds for that matter, without first getting a judgment in court. So, your creditors can only take your stimulus money if you already have court-ordered judgements against you.
Protect Your Money
We help clients protect there money from wage and other garnishment. For example, we have clients already with judgments against them which include impending garnishments. For these clients, we ask creditor’s counsel to refrain from executing on the garnishment as a courtesy. We ask because the client will soon file for Chapter 7 bankruptcy protection. However, they are not required to stop garnishments or collections efforts until they receive a Bankruptcy Case Number from us. Unfortunately, we cannot provide them with a bankruptcy case # until after the filing of the bankruptcy petition.
After the filing of the bankruptcy petition, the debtor is protected from further collections efforts. This is because of the automatic bankruptcy stay. Also, we can work for the return of any money that was collected through a wage garnishment or levy within 90 days prior to the bankruptcy filing.
If you are afraid of a levy or wage garnishment, give us a call. You may be better off immediately taking these funds out of your bank account. You can use the money to quickly file your bankruptcy petition. Again, this protects your stimulus money, wages, and other income from creditors.