As the third stimulus checks are hitting bank accounts, so are private debt collectors who are staking a claim to the $1,400 government checks.
Debt collectors who have a judgment against a person for unpaid credit card or medical bills are moving to get the money headed to individuals’ bank accounts, and, currently, they are able to do just that.
However, Senate Democrats have introduced a bill that aims to prevent the debt collectors from getting the stimulus money.
Sens. Sherrod Brown, D-Ohio; Ron Wyden, D-Oregon, Bob Menendez, D-New Jersey, and Chris Van Hollen, D-Maryland, introduced the bill Wednesday that would shield the payments from debt collectors.
“The two previous relief payments were shielded from predatory private debt collectors,” Sen. Ron Wyden said in a statement last week. “While Democrats intend to protect the third payment from private debt collectors, Senate rules did not allow us to include that protection in the American Rescue Plan.”
The first stimulus bill that included $1,200 paid out in April 2020 also failed to include provisions that would have kept debt collectors from garnishing the payments. However, the stimulus bill which was passed in December had a provision that blocked collectors from claiming the payments as part of a court order they had against debtors.
The latest COVID-19 stimulus bill did not include the provision to protect direct payments from debt collectors because Democrats used the legislative process of reconciliation to push the bill through the Senate without the need for support from Republicans.
While the third stimulus check is not protected from debt collectors, it is protected from other debts administered by the federal government such as federal student loans.
Banks can decide to use the stimulus direct deposit to pay for overdraft fees, according to a New York Times story.
Nursing homes and care facilities are also not allowed to ask for a stimulus payment as a payment. Nor can your landlord ask for the money.
Cox Media Group