Can debt collectors seize your stimulus check? It depends on your state

The coronavirus stimulus checks that began arriving for millions of Americans this week are subject to garnishment from debt collectors depending on where you live, media outlets reported.

Individuals earning up to $75,000 will get $1,200 and married couples earning up to $150,000 will get $2,400 plus $500 for each dependent under the age of 17, according to The New York Times.

The CARES Act prevents stimulus money from going to the federal and state governments for debt collection but “does not specifically address garnishment or bank offsets for other debts. Instead, it gives Treasury the authority to issue rules and guidance to carry out the purposes of the stimulus payments,” according to the National Consumer Law Center.

That means that even though the IRS or your state government can’t seize your check, it’s still subject to garnishment or debts owed to banks. Some customers have said banks have seized part or all of their stimulus checks due to their accounts being overdrawn, according to The New York Times.

Joseph James Davis Jr. of Mena, Arkansas said his bank took the majority of the $3,400 stimulus money for him and his wife and left $611 after he fell victim to a scam, The New York Times reported.

“I’ve never been scammed before,” Davis said, according to The New York Times.

Whether or not your money is subject to debt collectors depends on what state in which you live.

Ohio Attorney General David Yost issued a warning to creditors on Monday, saying that stimulus money is protected 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.”

Massachusetts Attorney General Maura Healey also said in a statement on Monday that stimulus money is “off limits” to credits. “These payments are supposed to help individuals and families put food on the table during this crisis, not enrich debt collectors,” Healey said in the statement. “With this guidance and letter, my office is putting the debt collection industry on notice that these payments are off limits.”

Nebraska Attorney General Doug Peterson warned creditors to proceed with “caution” because Nebraska law may exempt the payments from some types of garnishment, according to a news release.

Hawaii’s Office of Consumer Protection and 25 state attorneys general also wrote a letter to Treasury Secretary Steven Mnuchin to urge him to prevent the stimulus money from being taken from creditors, according to USA Today.

“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,” they wrote in the letter, USA Today reported.

This story was originally published April 17, 2020 at 6:19 PM with the headline "Can debt collectors seize your stimulus check? It depends on your state."