States prevent money from being garnished

The new $ 1,400 stimulus controls are aimed at helping millions of Americans cope with financial difficulties due to the Covid-19 pandemic.

However, the legislation that authorized these payments is very careful: the funds could be set aside for outstanding outstanding debts.

This applies to private debts, such as medical bills or credit card debts, which are the subject of a court decision.

The American Rescue Plan Act, which was adopted through a process called budget reconciliation, did not protect incentive controls against confiscation.

More from personal finance:
Checking the stimulus less than expected? How the IRS will notify you
How to Manage an Inherited 401 (k) or IRA
People weigh the “revenge expenses” with a $ 1,400 check

Democratic Sen. Sherrod Brown of Ohio, Ron Wyden of Oregon, Bob Menendez of New Jersey and Chris Van Hollen of Maryland have put forward a proposal to protect incentive payments against private debt collectors.

But efforts to advance this bill were shut down by Senate Republicans last month.

“Senator Brown will continue to look for ways to ensure that any federal payments go to American families and not to debt collectors,” the lawmaker’s office said.

Meanwhile, some states have stepped up to protect payments. The efforts are similar to those made last year, when the first stimulus checks of $ 1,200 were also confiscated. (The $ 600 incentive checks approved by Congress in December were generally exempt.)

Here is a working list of states that have taken action so far.

Previous stimulus controls have been protected from confiscation by the Colorado legislature.

However, this does not apply to the new $ 1,400 incentive checks.

“We are currently working on another bill to increase overall protection for gaskets, which would help protect new incentive controls,” said Lawrence Pacheco, communications director at the Colorado Attorney General’s Office.

Massachusetts Attorney General Maura Healey issued instructions in March that the $ 1,400 incentive checks were exempt from seizure or seizure under state law.

“These incentive payments must go directly to help people and families struggling to pay for housing, food, utilities and other basic needs, and not in the hands of debt collectors,” Healey said in a statement.

However, the instructions do not apply to actions by the Massachusetts Department of Revenue, including those relating to due child support.

In January, Minnesota Gov. Tim Walz, a Democrat, amended and extended an executive order that classifies money as “government assistance as needed,” which is still in effect.

Incentive funds are exempt from collection at least six months after receipt, according to the Minnesota attorney general’s office.

Nebraska Attorney General Doug Peterson issued an announcement in March clarifying that $ 1,400 incentive checks could be exempt from seizure, seizure or execution for some low-income individuals.

“Nebraska law exempts certain income and assets from enforcement and seizure by creditors and debt collectors,” the announcement reads. “The purpose of these exemptions is to ensure that individuals have sufficient income and property to provide basic necessities, such as housing, food and utilities.”

New Jersey Gov. Phil Murphy, a Democrat, announced in March that some financial institutions in the state had agreed to protect the $ 1,400 checks from being taken.

“We want residents who have received their federal incentive funds to be able to use this as they see fit,” Murphy said in a statement. “I’m pleased that 50 banks and credit unions have signed our agreement to protect these federal payments received by New Jerseyans from being garnished for previous debts or overdue accounts.”

Protection lasts for at least 30 days after the funds are deposited in a consumer’s account.

New York Attorney General Letitia James issued guidelines in March to prevent debt collectors from facing $ 1,400 payments.

“This official guidance clearly shows that banks and debt collectors cannot freeze or confiscate incentive funds for New Yorkers, especially those most in need at this time,” James said in a statement. “My office remains committed to protecting the rights of New Yorkers and ensuring that any institution that violates these guidelines will be held accountable to the fullest extent of the law.”

In addition to seizure, the guidance also applies to clearing, through which money from accounts is used to pay debts to banks.

However, the guidelines do not apply to actions taken by New York State, such as efforts to collect due child support.

Oregon continues to protect stimulus controls against confiscation after the Oregon legislature passed a law in an emergency session, according to a spokeswoman for Oregon Attorney General Ellen Rosenblum.

In addition, the Oregon Child Support Program will not guarantee incentive checks from financial institutions, the spokesman said.

Rhode Island Attorney General Peter F. Neronha recently issued guidelines indicating that $ 1,400 incentive checks are protected from seizure or seizure by debt collectors.

“These payments are a lifeline for so many families in Rhode Island who have been devastated by the pandemic,” Neronha said in a statement. “They belong to the beneficiaries and are not a fair game for debt collectors.”

Moreover, the prosecutor general’s office will take steps to enforce the law if a creditor tries to get hold of an incentive payment.

Virginia Attorney General Mark R. Herring announced last week an amendment to a law to protect $ 1,400 stimulus checks against debt collectors.

The law was originally passed last year to protect the $ 1,200 CARES Seizure Act payments.

The amendment “ensures that Virginians are able to fully retain their federal incentive payments, protecting this money from debt collectors and creditors,” according to the announcement.

In March, Washington Gov. Jay Inslee, a Democrat, updated a proclamation on consumer debt confiscations with a new language to include “federal payments of any kind issued in response to the Covid-19 pandemic.” $ 1,400 incentive.

“Your incentive check should help pay for necessities such as food and rent,” Washington Attorney General Bob Ferguson said in a statement. “You don’t have to be paid to pay medical bills.

“If the consumer debt collectors follow your stimulus payment, contact my office.”

This article may be updated as new information develops. Please check again for updates.

Having trouble getting your $ 1,400 incentive check due to unpaid debts and willing to share your story? E-mail [email protected].