New York blocks debt collectors from garnishing coronavirus stimulus checks
After the IRS started sending out the third stimulus check of up to $1,400, many were worried that debt collectors might garnish their payment. Gov. Andrew Cuomo has now put those worries to rest at least for New Yorkers, by officially protecting the coronavirus stimulus checks from debt collectors.
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Coronavirus stimulus checks: protection from debt collectors
On Thursday, Cuomo signed legislation that blocks debt collectors from garnishing any money sent by the $1.9 trillion American Rescue Plan. The American Rescue Plan did not specifically protect the stimulus checks from collectors.
Now, legislation signed by Cuomo blocks the collectors from accessing those funds. There are, however, a few exceptions, including child and spousal support and fraud recoveries.
“This critical legislation will help ensure relief payments made to New Yorkers are protected from the unscrupulous debt collectors so that money can be used as it was intended,’’ Cuomo said in a statement.
This new legislation does not just protect the latest stimulus payment, but all the “relief payments to New Yorkers under these federal acts, including stimulus payments, tax refunds, rebates, and tax credits.”
A New Yorker who is “subject to a money judgment being enforced against their bank account” will get a notice that their coronavirus stimulus payment is protected.
If a debt collector has already garnished funds from your stimulus payment, then you need to fill out a form to claim your money back. Moreover, if a debt collector takes your stimulus payment after May 13, then you need to file a complaint with the state Department of Financial Services.
If you are a New Yorker and have any questions about the latest legislation, you can call the New York Department of Financial Services Consumer Assistance Unit (at 800-342-3736). You may also send an email to [email protected].
More similar legislation needed
At the time of the first stimulus checks of up to $1,200, private banks and creditors were allowed to garnish the payment. The second stimulus check of up to $600, which was passed in December, came with full protection against debt collectors.
However, the rules partly changed with the third check. Since the third stimulus bill was passed using a special process called budget reconciliation, it didn’t get protection from all garnishment.
From the outset, the third stimulus checks had protection from outstanding tax debt and child support, but not from private debts. Though efforts were underway to come up with legislation that excludes all garnishment, little success has been made so far.
This new legislation for New Yorkers is the first major breakthrough in protecting stimulus payments from debt collectors. Hopefully, more states (or even the federal government) would come up with similar legislation to ensure individuals and families are able to use the money for what it is meant for.
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