As a result of passage of the CARES Act, millions of Americans began receiving federal Economic Impact payments or stimulus checks, to assist them in coping with the COVID-19 pandemic. However, unlike other government benefits payments, such as Social Security or disability, these payments may be garnished by creditors to cover unpaid debts.
Many states are taking action to shield payments from debt collectors and creditors.
Wage Garnishment As of April 28, 2020
- Stimulus payments are exempt from garnishments and bank setoffs. The order does not protect against garnishments due to criminal actions requiring restitution or past due child support.
- Strongly urges state financial institutions not to use a stimulus payment to satisfy account overdrafts.
- Prohibits creditors and debt collectors from initiating, filing, or acting upon any statutory remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property, or funds for the payment of a debt to a creditor.
- Suspends laws that permit wage garnishment. The state Department of Financial and Professional Regulation also issued best practices recommending an array of steps institutions can take to assist borrowers, including deferring collection measures.
- Exempts stimulus payments from garnishment and from offseting financial instittuion accounts.
- Asserts under Massachusetts law that all funds provided to residents are exempt from seizure, including garnishment, and attachment.
- Stimulus payments may be exempt under existing Nebraska law and that “any attempt or threat by a creditor or a debt collector to garnish or attach funds provided through the CARES Act, if that property would have otherwise been exempt under Nebraska law, will be considered an unfair trade practice in violation of Nebraska’s Consumer Protection Act.”
- Stimulus payments are exempt under New York law and that any person garnishing or attempting to garnish such payments has violated various state and federal laws. The guidance also states that these payments are exempt from bank setoff.
- Asserts that stimulus payments are exempt from garnishment because the payments are “emergency support” to help Ohioans with basic needs.
- Prevents stimulus payments from being garnished by creditors. The order does not protect against garnishments due to criminal actions requiring restitution or civil judgments based on a criminal conviction.
- Exempts CARES Act payments from garnishment.
- Exempts CARES Act payments from garnishment or collection under Vermont law. The Attorney General also urges financial institutions to voluntarily suspend collection activity for overdrafts or other administrative fees.
- Suspends garnishments, the collection of judgments for consumer debt and the accrual of post judgment interest judgments.