Private debt collectors can seize $1,400 coronavirus relief checks to pay creditors

WASHINGTON – A warning for Americans who will receive $1,400 stimulus checks under the third round of direct COVID-relief payments: If you have unpaid debts, creditors may come after your money.

Debt collectors will be able to garnish the stimulus funding that will be distributed to millions of Americans under the $1.9 trillion American Rescue Plan that the House gave final approval on Wednesday. President Joe Biden will sign the legislation into law on Friday.

The second round of stimulus payments distributed in December barred creditors from garnishing the money. But the Senate was unable to include such protection in the latest bill because of the budgetary rules under which the relief package was approved.

Pandemic relief:$1,400 checks could start arriving within weeks under latest COVID-19 relief package

Debt collectors can garnish the $1,400 checks that will be sent to millions of Americans under President Joe Biden's $1.9 trillion COVID-relief package.

Banking industry and consumer protection groups are calling on Congress to close the loophole.

“The economic impact payments are intended to help families purchase food and other necessities to make ends meet,” the American Bankers Association and a coalition of groups wrote in a letter to congressional leaders Tuesday. “Many people were already struggling prior to the coronavirus crisis and millions have now been laid off or had their hours cut.”

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