Can Debt Collectors Snatch Your Stimulus Check? Here’s How You Can Protect Your Money.

By Rachel Puryear, Attorney at Law

If you have not yet received your coronavirus stimulus payment, you are probably eagerly anticipating it. Such payments were intended to bring essential relief to the many Americans who are struggling following huge job losses. However, some people have had a rude shock to find out that their payments were seized by debt collectors. Guidance from the U.S. Treasury has given a green light for payments to be seized via court-ordered garnishment, or for banks to apply the payments to bank fees and private loans. The intent of the stimulus payments is to help people survive in a time of crisis, not pay off old debts. So what can you do if you are concerned about this happening to you – or worse yet, if it already happened?

Hand in a suit grabbing a bag of money out of the hands of a screaming man.

If You Have Not Yet Received Your Payment, but are Afraid it Could Be Seized:

If you have not yet received your payment, and you are afraid it might be seized, here’s a few things to check:

  • What financial information did you last provide to the IRS? If you have received a direct deposit information before from the IRS (refund check), they will automatically send your payment to the account that you last provided to them. If you never gave the IRS your bank information and you want to provide your bank information to the IRS to speed up the payment, go here to the IRS’s website and enter your current information ASAP. You can also check the status of your payment.
  • Now that you figured out where the money is going, do you owe debts to that bank? If you owe on fees (such as overdraft) and private loans to your bank, your bank could seize the payment. However, your bank might give you a pass on the stimulus payment, and fortunately many already are doing so – see more below.
  • Do you owe debts that could be subject to court-ordered garnishment? If you have been served with a garnishment order, it is important to respond to it. Go to the courthouse referenced on the order to respond, and/or get legal advice. Even if your bank is not applying stimulus payments towards debts to the bank, they may still be required by law to comply with garnishment orders from other debt collectors! This is why many banks and consumer advocates are pressing the Treasury Department to shield stimulus money from this kind of collection action.
  • A couple more notes: State and federal debts are already exempt from garnishment of stimulus payments. However, delinquent child support will still be allowed to be garnished from stimulus payments even if other debts are shielded from garnishment.
  • To their credit, JP Chase Morgan, Wells Fargo, and Citigroup have said that they will not grab stimulus money for debts to the bank. JP Chase Morgan will send payments back to the government if they receive a payment to an account with a negative balance (the Treasury can then mail the check to the recipient). Wells Fargo and Citigroup have both said they will suspend collecting on overdraft fees for one month so that stimulus payments will not be applied to these fees. Wells Fargo has said that they will cash stimulus checks in their banks for no fee.
  • Contact your Congressional representatives and urge them to protect stimulus payments from debt collection. Make yourself heard to your representatives.
  • Where do you live? Some states (MA, OH) are issuing guidance to local debt collectors that stimulus payments are off limits. Others (NY, CA, IL, OH, NM, VA, MN) are urging the U.S. Treasury to protect stimulus payments by allowing banks to suspend complying with court-ordered garnishments. States may continue to take further action, so the states protecting against such garnishment could grow.

If Your Payment Was Already Garnished:

If your payment has already been garnished, you may be able to fix the situation.

  • If your payment was applied to bank fees or loans, call your bank and ask them to reverse the charges. Your bank might be willing to help you, but not yet have automatic systems in place to protect the stimulus payment.
  • If the above step does not work, or if your payment was garnished via a court order, contact your local Congressional representatives. Demand that they take action to protect stimulus payments, and also ask to be assigned a caseworker to help you with your situation. You are entitled to such assistance from your local Congressional representative’s office.
  • Also see other recent posts on this blog about getting coronavirus-related benefits and relief.

As always, dear readers, be safe and healthy out there. Please help keep everyone safe by observing official recommendations for social distancing, sheltering in place, covering your face in public, and practicing proper hygiene. Please also help others where you can in ways big and small, and ask for help if you need it. We will all get through this together. Thank you for reading, and for following me. I hope you enjoyed this, and learned something valuable.

** Got a legal subject or question you are curious about? Email it to me at Your question may be discussed in a future blog post!

Please note that the above is offered for educational purposes only. The information presented may not take into account every exception, variation, or complication which could apply to someone’s legal matters. Accordingly, nothing in this post or blog is ever intended as, nor should be construed by or relied upon by anyone, as legal advice. If you need legal advice, please consult an attorney who can give you assistance specific to your needs.


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