States prevent seizure of money
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New $ 1,400 stimulus checks are aimed at helping millions of Americans weather the financial hardships of the Covid-19 pandemic.
Yet the legislation that authorized these payments carries a big caveat: the funds could be garnished for overdue unpaid debts.
This goes for private debts, such as medical bills or credit card debts, which are the subject of a court order.
The American Rescue Plan Act, which was passed through a process called budget reconciliation, did not protect stimulus checks from garnishment.
Democratic Meaning. Sherrod Brown from Ohio, Ron Wyden from Oregon, Bob Menendez from New Jersey and Chris Van Hollen from Maryland, made a proposal to protect stimulus payments from private collection agents.
But efforts to move this bill forward have been closed by Senate Republicans last month.
“Senator Brown will continue to look for ways to ensure that all federal payments go to American families and not to debt collectors,” the lawmaker’s office said.
In the meantime, some states have stepped up their efforts to protect payments. The efforts are similar to those made last year, when the first $ 1,200 stimulus checks were also garnished. (The $ 600 stimulus checks that were approved by Congress in December were generally exempt.)
Here is a working list of states that have taken action to date.
Previous stimulus checks were protected from garnishment by the Colorado legislature.
However, this does not apply to new $ 1,400 stimulus checks.
“We are currently working on another bill to increase general protections for garnishments that would help protect new stimulus checks,” said Lawrence Pacheco, director of communications in the Colorado attorney general’s office.
Massachusetts Attorney General Maura Healey directives issued in March that made stimulus checks of $ 1,400 exempt from garnishment or foreclosure under state law.
“These stimulus payments must go directly to helping struggling individuals and families pay for housing, food, utilities and other basic needs, and not into the hands of debt collectors,” said Healey in a statement.
The guidelines, however, do not apply to Massachusetts Department of Revenue actions, including those related to overdue child support.
In January, Minnesota Governor Tim Walz, a Democrat, amended and extended a decree which classifies the money as “government assistance based on need,” which is still in effect.
Stimulus funds are exempt from collection for at least six months after receipt, according to the Minnesota attorney general’s office.
Nebraska Attorney General Doug Peterson posted an ad in March, clarifying that stimulus checks of $ 1,400 may be exempt from garnishment, garnishment or execution for certain low-income people.
“Nebraska law exempts certain income and property from execution and seizure by creditors and debt collectors,” the statement said. “The purpose of these exemptions is to ensure that individuals have sufficient income and assets to meet basic needs such as housing, food and utilities.”
New Jersey Governor Phil Murphy, Democrat, announced in March that some state financial institutions had agreed to protect the $ 1,400 checks against removal.
“We want residents who have received their federal stimulus funds to be able to use them as they see fit,” Murphy said in a statement. “I am pleased that 50 banks and credit unions have signed our agreement to protect these federal payments received by New Jersey residents from garnishment for past debts or overdraft accounts.”
Protection lasts for at least 30 days after funds are deposited into a consumer’s account.
New York Attorney General Letitia James published guidelines in March to prevent debt collectors from seizing payments of $ 1,400.
“These official guidelines make it clear that banks and debt collectors cannot freeze or seize stimulus funds intended for New Yorkers, especially those who need it most during this time,” James said in a statement. . “My office remains committed to protecting the rights of New Yorkers and ensuring that any institution that violates these guidelines will be held accountable to the fullest extent of the law. “
In addition to garnishment, the guidelines also apply to offsets, whereby money from accounts is used to pay debts owed to banks.
However, the guidelines do not apply to actions taken by New York State, such as efforts to recover overdue child support.
Oregon continues to protect stimulus checks from garnishment after the Oregon legislature passed legislation in an emergency session, according to a spokeswoman for the Oregon attorney general, Ellen Rosenblum.
In addition, the Oregon child support program will not seize stimulus checks from financial institutions, the spokeswoman said.
Rhode Island Attorney General Peter F. Neronha recently directives issued indicating that the $ 1,400 stimulus checks are protected from garnishment or seizure by debt collectors.
“These payments are a lifeline for so many Rhode Island families who have been devastated by the pandemic,” Neronha said in a statement. “They belong to the beneficiaries and are not a fair game for the debt collectors.”
Additionally, the attorney general’s office will take steps to enforce the law if a creditor attempts to seize a stimulus payment.
Virginia Attorney General Mark R. Herring announced an amendment to a law last week to protect collection agents’ $ 1,400 stimulus checks.
The law was originally passed last year to protect the $ 1,200 payments from the CARES Act from garnishment.
The amendment “ensures that Virginians are able to keep all of their federal stimulus payments, protecting that money from debt collectors and creditors,” according to the announcement.
In March, Washington Governor Jay Inslee, a Democrat, updated a proclamation on consumer debt garnishments with new wording to include “federal payments of any kind issued in response to the Covid-19 pandemic,” which applies to stimulus payments of $ 1,400.
“Your stimulus check should help pay for necessities, such as food and rent,” Washington Attorney General Bob Ferguson said in a statement. “It shouldn’t be used to pay medical bills.
“If the consumer debt collectors go after your stimulus payment, contact my desk. “
This article may be updated as new information develops. Please check for updates.
Have you had trouble getting your $ 1,400 stimulus check due to unpaid debts and are ready to share your story? E-mail firstname.lastname@example.org.