Coronavirus stimulus checks could be swiped by debt collectors, officials warn

Undocumented workers not receiving stimulus checks

As the coronavirus outbreak continues to sweep across the country, immigrant communities are being hit especially hard.

FOX BUSINESS - As many as 80 million can expect to receive their economic impact payments from the federal government by Wednesday – but some state officials are concerned the money could be seized by debt collectors before it ever reaches consumers.

In a letter to Treasury Secretary Steven Mnuchin this week, a group of 25 state attorneys general requested that the government stipulate that the coronavirus relief payments would not be subject to garnishment by creditors and debt collectors.

“Unfortunately, in what appears to be a legislative oversight, the CARES Act does not explicitly designate these emergency stimulus payments as exempt from garnishment, as similar government payments (such as social security, disability and veterans’ benefits) are,” the letter read. “As a result, there is a risk that stimulus payments may be garnished by creditors or debt collectors, which would undermine the purpose of the CARES Act … “

The Treasury does have the authority to issue a regulation preventing the cash from garnishment by debt collectors.

Because the payments are available to any individual with an income up to $99,000 it is feasible that some people may be at risk of having their cash garnished by debt collectors if they are behind on payments, have an outstanding balance or an old debt. In some cases, debt collectors obtain a court order whereby they are permitted to take money from them through various means – including directly from bank accounts.

Many states allow garnishment, and limitations vary by state.

CORONAVIRUS IN DC, MARYLAND AND VIRGINIA

The economic impact payments will be $1,200 per adult for those with adjusted gross incomes of up to $75,000. The threshold for married couples is $150,000 – they are eligible for $2,400 and $500 per child.

The IRS is ahead of schedule when it comes to issuing the direct deposit payments, Mnuchin said Monday. It is expected to begin processing paper checks next week.

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Late Monday, the government also got approval from the Consumer Financial Protection Bureau to issue the payments on prepaid cards – as a potentially safer and faster alternative to paper checks. The method has been advocated for reaching underbanked individuals.

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