Updated: May 18
The stimulus checks are beginning to roll out this week through the mail and direct deposit as a part of the $2 million CARES Act from the federal government. Can a private debt collector reach in a take your stimulus money? This is what you need to know.
Is your money protected under the CARES Act?
At this time, once the money hits your account, a private debt collector can place a garnishment order for money deposited in your account if you owe them money. There are a few states, such as Massachusettes and Texas that have issued emergency regulations to protect your money. Most states do not.
Money cannot be taken by the government for back taxes or defaulted federal student loans. They can, however, take money for owed child support.
What can you do to protect your money?
If you are at risk for garnishment, monitor your account. Once the money is deposited, you need to remove it in the form of cash, transfer it electronically, or spend it on necessities like groceries and other essentials.
There are some senators making efforts to get provisions in place to protect this money so it can be used as it was intended. If the treasury fails to put protection in place for is money, the CARES Act money will be at risk of being seized by creditors.
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