Stimulus checks can be garnished by debt collectors. AG James wants to change that.

April 15, 2020 Rob Abruzzese

Attorney General Letitia James. Photo: Caroline Ourso/Brooklyn Eagle

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In an attempt to keep the economy from collapsing, the U.S. Government plans to issue economic relief through $1,200 stimulus checks to taxpayers. However, New York State’s Attorney General Letitia James is concerned that this money may go directly to debt collectors in some cases.

Many government programs designed to aid people and businesses affected by COVID-19 explicitly exempt them from garnishment from creditors. Payments made under the CARES Act are not exempted.

James joined a bipartisan coalition of 24 attorneys general in sending a letter to U.S. Treasury Secretary Steven Mnuchin calling on the Department of the Treasury to take immediate action to ensure that payments authorized by the CARES Act actually get to the taxpayers.

“Millions of New Yorkers impacted by COVID-19 wake up every day uncertain about their ability to pay medical bills, buy groceries, or pay rent,” said Attorney General James. “The CARES Act was intended to serve the American people’s basic needs and provide a vital lifeline to all who have lost their jobs or seen their incomes reduced. The Treasury Department can stop suffering for millions of Americans by taking immediate action and protecting these payments before many of these payments go out.”

James points out that other social welfare programs like Social Security, disability and veterans payments are explicitly exempt from all garnishment and legal mechanisms involved in “freezing” funds in bank accounts by creditors and debt collectors. James said it was likely an oversight by congress that the CARES Act funds were not provided similar protections.

CARES Act checks are expected to be $1,200 for eligible adults and $500 for qualifying children.

“During this public health and economic crisis, the states do not believe that the billions of dollars appropriated by Congress to help keep hard-working Americans afloat should be subject to garnishment,” the attorneys general wrote in the letter to Mnuchin.

They added, “Treasury has stated that ‘[i]n the weeks immediately after the passage of the CARES Act, Americans will see fast and direct relief in the form of Economic Impact Payments,’ and we request Treasury’s assistance in ensuring Americans are able to retain that monetary relief.”