Stimulus checks are en route, but, they could face a roadblock for Americans who owe a debt.
The previous payments were protected under the CARES Act. The $1,200 checks were safe from all debts except delinquent child support. With the $600 bills, congress expanded the exclusion even for owed child support.
President Biden’s American Rescue Plan got passed through the budget reconciliation process, and lawmakers weren’t unable to include protections. Reported on Forbes:
Debts/Student Loans In Good Standing
Typically, if you’re in good standing on your loan or debt, the lender or creditor can’t seize your money or property.
Defaulted Federal Student Loans
The CARES Act temporarily suspended collection activities on defaulted government-held federal student loans. President Biden extended the moratorium to September 30. After September 30, unless the moratorium gets extended, the federal government can block or cancel federal payments, and apply them towards your defaulted student loans.
Private Student Loans, Credit Cards, and Other Debts
There’s rare exceptions; they’re not allowed to take someone’s money with these lenders forcibly. They’d have first to sue them in court and obtain a judgment against them. A court judgment can give the lender/debt collector more powers to pursue a debtor’s income or property. However, it varies from state to state, the article reports.
What To Do If A Debt Collector Takes Your Stimulus Money
It would be best if you obtained a licensed consumer protection attorney. If the debt collector broke any laws, an attorney could help get your money back and you could be entitled to damages. If a debt collector makes false threats about taking your stimulus check, it could give you a cause of action to pursue that debt collector for damages. The article notes you can find a local consumer protection attorney in your state through the National Association of Consumer Advocates.
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