How to Protect Your Stimulus Check from Creditors


How to protect your stimulus check from creditors

Millions of American households have already started receiving Economic Impact Payments, or Stimulus “checks.” If you’re eligible, the Treasury Department will be depositing the funds into the same bank account where it directly deposited your tax refund for 2019. (Keep in mind, the Stimulus payments are also being sent to people who don’t usually file or pay federal income taxes, i.e. individuals who receive monthly payments from the Social Security Administration.)

The reason for these payments is that the federal government is attempting to “stimulate” the economy, which COVID-19, or the novel coronavirus, has wrecked for individuals all over the nation. Millions of Americans have lost their jobs or seen their pay/hours significantly reduced since the beginning of March. The ripple effect of consumers not having money to spend, and businesses not bringing in income is a growing disaster that needs to be addressed.  This need is especially felt locally in Bay County, Florida, and the surrounding areas where everyone is also still recovering from the devastation of Hurricane Michael in 2018. 

While the government wants Americans to spend this money to keep the wheels of commerce continuously turning, some banks may want to seize this money to recover anything owed to them by their customers. Additionally, some credit card companies and other creditors may try to convince you to use this “free” money to pay them. Do not let these people fool you.  When Congress first passed the CARES Act authorizing these payments, it did so with the intent of helping consumers meet their needs without creditor interference. However, just because that was Congress’s intent, doesn’t mean that Creditors will play along; they will always try to make sure that you pay them no matter what. Creditors may still attempt to levy or garnish these funds, and leave it up to the consumer to try and stop them. 

So, what can you do to protect your stimulus money from creditors?

The ultimate defense against a wage or bank account garnishment is usually bankruptcy.

If a judgment creditor garnishes funds from your bank account and you file bankruptcy within 90 days of the garnishment, you potentially may be able to recover the funds back from the creditor. In any case, the bankruptcy will dissolve the garnishment, even if you filed more than 90 days after the initial levy. 

If you are considering filing for bankruptcy, you might be questioning whether the bankruptcy trustee can also take your stimulus money. The Bankruptcy Code governs what property debtors may keep–or “exempt” when they file bankruptcy. When Congress passed the CARES Act, they actually spent a great deal of time making temporary amendments to the Bankruptcy Code to make sure that these payments were protected if you had to seek relief under the Bankruptcy Code.

The Wynn Law Firm has over 40 years of experience in creatively and efficiently addressing the needs of every client who walks through our doors. This dedication and experience allows us to address any type of possible bankruptcy need you may have regardless of how simple or complex it may be. Contact us today to see for yourself the relief and protection that bankruptcy can provide to your situation.  

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