Stimulus

Protect Your Stimulus Payment

If you have been contemplating bankruptcy, now might be the right time to act in order to keep your recent stimulus check.

The latest round of stimulus payments to help Americans through the COVID-19 pandemic are open to being seized by private debt collectors. If you have unpaid credit card or medical bills and have a judgement against that debt, your stimulus funds could be taken away from your bank account. Stimulus payments are worth up to $1,400 per person in your household and could help with paying down debts or catching up with your mortgage payments. 

Why Isn’t Your Stimulus Payment Protected?

As the third round of stimulus payments start to hit bank accounts this week, they have very little protection from debt collectors. This is largely due to procedural rules of passing the relief package through budget reconciliation instead of a bill. 

Budget reconciliation was created under the Congressional Budget Act of 1974 and allows a simple majority to pass legislation on spending or taxes. More importantly, reconciliation allowed lawmakers to circumvent the 60-vote threshold in the Senate and get another payment in the hands of families who need them as fast as possible.

This method for passing government expenses comes with limitations. Budget reconciliation can only be used for budget items and does not include the laws that limit debt collectors from seizing payments.

Learn more about garnishments in Michigan >>

How Are Stimulus Funds Taken from you?

The initial $1,200 stimulus payments passed through the CARES Act last year were protected from all debt collection except for child support. That protection expanded even more during the second round of payments for $600 in December. 

Now, third-party debt collectors are coming after consumers. It is fairly easy for debt collectors to get a judge to award a judgement against you. When that happens, debt collectors can freeze your bank account if you receive direct deposits from the IRS. Once the stimulus funds are deposited into your account, they can be taken by the debt collector.

In some cases, you may not even realize your account has been frozen until you are served a copy of the writ of garnishment.

What Can You Do to Keep Your Stimulus Payment?

Every situation is different, but if you are behind on your bills and feel your stimulus payment may be seized, contact a lawyer to help you navigate your financial situation. 

If you have been considering filing for a Chapter 7 or Chapter 13 bankruptcy, now is the time to start the process. An attorney can help you file for protection against your creditors, oftentimes on the same day you contact them. A bankruptcy filing stops any debt collection efforts from moving forward.

If your stimulus check has already been intercepted by a creditor, you may be able to recover those funds if a Bankruptcy is filed within 90 days of the interception of those funds.

Acclaim Legal Services was established to do one thing: help our clients find lasting debt resolution and restored credit.

We are here to answer your questions and provide qualified legal advice. Don’t delay getting your credit and life back on track – call us today at 866-261-8282 or schedule a free consultation.