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Can creditors garnish stimulus payments?

On Behalf of | Mar 17, 2021 | Bankruptcy

News that millions of Americans will receive another round of stimulus money was undoubtedly welcome to families and individuals across Pennsylvania who have been struggling over the past year. Between job losses and business closures resulting from the COVID-19 pandemic, earning a living has been more difficult than ever for many people.

Thus, getting a check for $1,400 can be a lifeline, giving folks some room to breathe and feel more financially stable for a bit. However, that sense of calm may not last long for people who have creditors coming after them, as creditors could garnish the stimulus payment.

Understanding garnishment of stimulus payments

Lawmakers approved this round of stimulus funds without the provision necessary to protect them from creditors. This means that private debt collectors can pursue garnishment to pay various debts, from medical bills and student loans to credit cards and taxes.

That said, borrowers should know that wage garnishment can only occur in specific circumstances. And garnishment practices and limits vary by state. In Pennsylvania, for instance, there are strict limits on the types of debt that can lead to garnishment and how much of a person’s wages can be garnished.

Protecting your money

Despite the potential vulnerability of these funds, there are ways to protect your stimulus check. One option is to watch your accounts and withdraw the money before creditors can garnish it.

Another option is to communicate with your banking institution or creditor to seek deferments. As this article notes, banks are encouraged to work with people adversely affected by the pandemic, so they could be more willing to work with lenders than people might expect.

Finally, if you are worried about the garnishment of this and any future stimulus checks, filing for bankruptcy could put an automatic stay in place. An automatic stay stops collection actions, including garnishment, at least temporarily.

Any person worried about wage garnishment or other debt implications would be wise to address their situation sooner rather than later. Parties can call the attorneys at The Quinn Law Firm at 814-806-2518 to discuss debt relief options and legal strategies to protect their financial future.


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