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If you’re behind on your debts, your coronavirus stimulus check could be taken from you.
Some states are fighting back to prevent that from happening.
This week, Ohio Attorney General David Yost warned creditors that those one-time government checks are protected by state law from garnishment.
Yost’s announcement was prompted by the CARES Act, the $2 trillion coronavirus stimulus legislation passed by Congress, because it allows private debt collectors to seize money for unpaid debts. The CARES Act does protect federal and state debts from garnishment.
“The stimulus checks were intended to be used during an emergency – to put food on the table, keep the lights on and a roof over our heads,” Yost said in a statement. “It wasn’t meant to pay off an old bill.”
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Many state attorneys general agree. That prompted 25 of them, including Yost, to send a letter to Treasury Secretary Steve Mnuchin on Monday urging him to reverse the policy.
“During this public health and economic crisis, the States do not believe that the billions of dollars appropriated by Congress to help keep hard-working Americans afloat should be subject to garnishment,” the officials wrote.
Massachusetts Attorney General Maura Healey also warned creditors that stimulus payments are “off limits” in that state. Nebraska Attorney General Doug Peterson warned creditors to “proceed with caution.”
Multiple senators, including Sen. Sherrod Brown, D-Ohio, have also called for changing the rule.
Some states have not responded to the law, said Lauren Saunders, associate director at the National Consumer Law Center.
“Given that we’re not going to get any federal clarity any time soon, we are still very much urging states to exercise whatever authority they can,” Saunders said.
Many payments have already gone out that could be subject to garnishment. But Congress could change that going forward through consensus legislation, Saunders said.
Meanwhile, some stimulus payments are going to bank accounts that may be dormant and/or have negative balances. Some banks are grabbing the stimulus payments, Saunders said. Others, such as Chase and Wells Fargo, have said they will not touch the money.
The conflict highlights a general lack of access to justice that many people face, Saunders said.
“This is especially egregious right now,” Saunders said. “But it happens on a regular basis that money that people need for food is taken from them.”
Without access to the courts, without access to attorneys, without sufficient funding for legal services, people just can’t exercise their rights.
Lauren Saunders
associate director of the National Consumer Law Center
If you find yourself in a tight spot, there are several actions you can take.
If your bank takes your money, call and ask them to reverse it. “Some banks may be willing to help and they just don’t have the automatic systems in place,” Saunders said.
If you have been served with a garnishment order, take steps to respond to it.
Try to find an attorney, Saunders recommended. If you are low-income or a senior, a local legal services office may be able to help you.
The National Association of Consumer Advocates’ website has an attorney search function.
If you can’t find an attorney, contact the court, Saunders said. You may be able to fill out a form to contest the garnishment order.
Finally, reach out to your state and federal lawmakers to ask them to help change the situation.
“Without access to the courts, without access to attorneys, without sufficient funding for legal services, people just can’t exercise their rights,” Saunders said.