Yes, Debt Collectors Can Take Your Coronavirus Stimulus Check

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Stimulus checks issued by the US government are starting to arrive in peoples’ banks accounts this week. Still, a lot of questions remain about them, including if debt collectors can take the cash.

Well, the answer apparently is yes, banks can snatch the cash before you can use it for bills, or food (which according to The Washington Post, is what most people are using the cash for).

A few scenarios where you could see the money get snatched:

  1. If your payment posts to a bank account where you owe money, say for overdraft fees. Of note, banks can’t take this cash for credit card charges, but they can for consumer loans and fees.
  2. If you have a garnishment order on your bank account from a debt collector.

There are some exceptions to this, even if you have a court order on your bank account — and millions of Americans do. Per The American Prospect, the US Treasury could have imposed restrictions on creditors being able to garnish this stimulus. That being said, some states have put executive orders in place, so check and see what has been done in your state before officially panicking.

On top of that, there are a few strategies you can employ to not have this happen to you if you are concerned that it might:

  1. Know your rights. If you are a recipient of Social Security, SSI, Veterans or other federal benefits you might be exempt to a certain degree.
  2. The money can’t be garnished until it is in your bank account. Opt for a check instead of direct deposit and then cash the check.
  3. You can redirect your stimulus payment to a prepaid card or bank account at a smaller bank or credit union (where creditors are less likely to service garnishment orders).

Remember: Stay calm, do your research, and find a solution that works for you.

Feature Illustration: Laura Caseley For The Money Manual