IF you have unpaid debts, your $1,400 stimulus check could be seized by debt collectors.
Millions of Americans are set to receive the third round of Covid relief payments – but creditors may come after your money, according to reports.
President Joe Biden, 78, signed his $1.9trillion relief bill in the Oval Office on Thursday afternoon, giving the green light to millions of $1,400 checks.
And Americans will start to see stimulus checks in their bank accounts this weekend, the White House said today.
While the second round of payments in December banned debt collectors from garnishing the cash, the Senate was unable to include the same protection in the latest bill due to budgetary rules, USA Today reports.
Consumer protection groups are now calling on Congress to close the loophole to shield the stimulus checks from private debt collectors.
"The economic impact payments are intended to help families purchase food and other necessities to make ends meet," a coalition of financial and consumer groups told Congress on Tuesday.
"Many people were already struggling prior to the coronavirus crisis and millions have now been laid off or had their hours cut."
The American Bankers Association joined the coalition to urge lawmakers to protect the checks from garnishment.
"We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment," the group said.
"Otherwise, the families that most need this money – those struggling with debt and whose entire bank accounts may be frozen by garnishment order – will be not be able to access their funds."
According to USA Today, Democrat Senator Ron Wyden, chairman of the Senate Finance Committee, said he will file separate legislation to protect the money from debt collectors so "families receive the $1,400 they need to pay rent and buy groceries."
During the first round of stimulus checks, some states and local governments brought in rules to protect creditors from getting their hands on the cash.
Garrett Watson, senior policy analyst at the Tax Foundation, said: "It was pretty uneven and depended on where you were living, the particular circumstances, whether or not it actually protected you or not."
Watson said one possible way of protecting the stimlus money is to open up a new bank account.
"A new bank account with new direct deposit information is less likely to be garnished than one that is under active collection," he said.
While the Covid relief bill does not protect against debt collectors seizing your money, it does protect against seizure of the cash to pay back taxes, child support, or other government debts.
White House Press Secretary Jen Psaki confirmed that Americans will start seeing the much-needed cash in their bank accounts in the next few days.
"People can expect to start seeing direct deposits hit their bank accounts as early as this weekend," she said.
Biden's name will not appear on this third round of stimulus checks.
Psaki said this is in order to "expedite the payments and not delay them."
The latest round of cash will start to be phased out for individual tax payers who earn $75,000 a year.
But once you hit the $80,000 annual gross income limit, you won't be able eligible for the help at all.
Moderates also forced tightened eligibility for couples hoping to obtain stimulus checks, now phased out completely at pair making $160,000.
However, those that fit the bill will receive $1,400 if they are single, and $2,800 if they are a married couple.
This also means that a family of four could see a package of up to $5,600.
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