You may be under the income limits to receive the $1,400 stimulus check, but you should be warned that you might never get your hands on the money.
The reason? Unpaid debts that are overdue.
However, know that under the terms of the Joe Biden administration’s American Rescue Plan, the stimulus check money cannot be garnished for unpaid federal debts or back taxes.
But the $1,400 checks can indeed be garnished for unpaid private debts—such as medical bills or credit card debts—if they are subject to a court order. Garnishment is a court order that allows for money to be removed from an individual’s bank account, and banks generally have to comply with a court’s demands.
Several Washington lawmakers, though, have taken the initiative to look into whether stimulus checks can, in fact, be garnished.
“We know predatory debt collectors are already lining up to try to take a cut of those checks,” Sen. Sherrod Brown said on the Senate floor late last week.
Brown called for the passage of a bill tackling that particular issue that he proposed alongside fellow Democrats, but it was eventually blocked by Sen. Pat Toomey, who argued that it was too late to change the bill and that it could help protect husbands or fathers who refuse to pay alimony or child support.
Earlier this month, the American Bankers Association sent a letter to Congress, urging lawmakers to “quickly pass standalone legislation addressing garnishment to ensure that American families will receive these benefits as intended.”
Also, this past week, the Consumer Financial Protection Bureau (CFPB) expressed its concerns regarding garnishing stimulus checks.
“If payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them,” CFPB Acting Director Dave Uejio said in a statement.
“We appreciate these efforts, which recognize the extraordinary nature of this crisis and the extraordinary financial challenges facing so many families across the country,” he added.
Keep in mind that if you haven’t yet received the direct payment, it doesn’t necessarily mean that it has already been garnished. The Internal Revenue Service has confirmed that roughly ninety million payments have been sent out already and that more checks are indeed on the way. More than likely, you will see the cash land in your bank account relatively soon, especially if you already have received the previous stimulus checks.
Like the previous payments, direct deposit recipients would be the first to get the money, followed by those receiving physical checks, which can take weeks to arrive by mail, and EIP cards, a prepaid debit card that one must activate online before using.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.