Stimulus Checks Can’t Be Seized by Debt Collectors — Now, It’s the Law

• Save

Yesterday, we reported on the Senate’s newly detailed COVID-19 relief legislation, the HEALS Act, including its proposed second round of stimulus checks. Now, it’s been revealed that debt collectors will be unable to seize these stimulus checks from eligible recipients who have outstanding federal and/or state financial obligations.

To recap, if the HEALS Act becomes law, individuals earning less than $75,000 per year and couples earning less than $150,000 per year will receive a $1,200 check or a $2,400 check, respectively. Unlike the CARES Act, however, this legislation would grant adults an extra $500 per dependent regardless of their age. The CARES Act limited its $500-per-dependent assistance to persons aged 17 and younger, excluding both college-age and elderly dependents.

And as noted, HEALS Act stimulus checks (and CARES Act stimulus checks, albeit retroactively) would be exempt from seizures resulting from state, federal, or even private debt – with the notable exception, it bears mentioning, of past-due child support. Those set to receive HEALS Act checks who are also behind on child-support payments will have their once-off stimulus compensation seized.

But under a quickly-passed bipartisan addendum, debt collections involving wage garnishment, bank levies, or any other collection tool would be expressly illegal if it seized upon stimulus benefits. That measure, which is quickly moving into law, would focus on keeping Americans out of dire financial straits — instead of servicing creditors.

“This is a common sense measure that will ensure the $1,200 Economic Impact Payments help individuals meet essential needs during these trying times, and don’t instead end up in the pockets of creditors and debt collectors,” Senator Chuck Grassley (R-IA) said. Senator Sherrod Brown (D-OH) also spearheaded the anti-debt collections measure.

While many have experienced financial hardship as a result of the pandemic, artists and music industry professionals have been hit particularly hard, largely owing to the essential shutdown of the live event sphere. But Americans nationwide have experienced difficulty getting back to work, with mass-layoffs and furloughs exacerbated by rising COVID-19 cases.

Yesterday evening, House Majority Leader Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) met with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows to begin negotiating the next round of stimulus legislation in earnest.

Discussing the talks in an interview this morning, Senator Schumer said, “Well, unfortunately, we’re pretty far apart right now, although I’m optimistic we can have a good solution at the end.”

Chief of Staff Meadows indicated just moments ago that the main negotiating-table obstacles are the $600 weekly federal unemployment benefits and the $915 billion in state and local aid proposed by Democrats in their $3 trillion HEROES Act. The chief of staff told reporters that Speaker Pelosi and Senator Schumer identified the earmarks as “must haves.”

The $600-per-week federal unemployment payments allocated under the CARES Act (which are added onto states’ respective unemployment payouts) will expire at this month’s end. The HEALS Act proposes dropping the federal unemployment bonuses to $200 per week until October, at which point recipients would start receiving 70 to 75 percent of their previous employment pay.

Politicians on both sides of the aisle have expressed a desire to finalize and agree upon stimulus legislation as soon as possible, but it’s unclear whether the above-mentioned hurdles – and broader disagreements about the package’s total value – will seriously delay the process.

More as this develops.