If you have been impacted by the coronavirus, you are not alone. Individuals feeling the most impact from this pandemic, are people that were already struggling with debt before the outbreak. Recently, Congress signed into law the CARES Act, to help struggling Americans impacted by the coronavirus. As part of the CARES Act, individuals who make less than $75,000 per year will receive a payment of $1,200 and couples making less than $150,000 per year will receive a total of $2,400. The Cares Act provides additional money to individuals with children. Eligible individuals with a child will get up to $500 per child.
Stimulus checks started being deposited into bank accounts at the end of last week and will continue to be deposited until everyone eligible receives their funds. The funds will be deposited as a direct deposit payment or a physical check.
When signing the CARES Act into law, Congress left out protections for the most vulnerable individuals who are already in debt. Congress failed to provide any protection against debt collectors. Thus, individuals who owe money for past debts will be at risk to debt collectors looking to garnish their stimulus checks.
Further, individuals who owe banks for overdraft fees, delinquent loans, and other charges can have their stimulus money taken to cover money owed.
Under the CARES Act, debts to Federal or State agencies are exempt. One exception to this is money owed for child support payments. Congress classified the stimulus checks as tax credits under the CARES Act instead, of classifying them as federal benefits thus, allowing the stimulus money to be open to garnishment from creditors.
Will They Take My Stimulus Money If a Creditor Has a Judgment Against Me?
Yes. Unfortunately, creditors can take your money if your creditor has entered a judgment against you. When a creditor gets a judgment, they can garnish your wages and put levies on your bank accounts. Debt collection law firms can get your bank account information very easily. When this happens they will request that the bank freeze your bank account. When a bank account is frozen, only money can go into the account. Banking institutions will not allow you to remove the funds from your account.
The only way to remove a judgment from a frozen bank account is by settling with your creditor, filing bankruptcy or fighting to remove the judgment in Court. Unfortunately, many courts are closed now and it will be nearly impossible for individuals to stop stimulus checks from being seized by creditors.
How Can I Avoid My Stimulus Check From Being Garnished?
A garnishment lawyer can help you to determine what your options are. The first steps to take to determine if your stimulus check will be taken from you is to find out if a creditor has entered a judgment against you. Man individuals don’t know if a creditor has gotten a judgment. If you have failed to show up to court, or reply to court papers chances are that you have an outstanding judgment against you. Call your bank to see if they have been served any papers. 
Speaking with a debt lawyer now can help you determine which steps you should take. Until the check is deposited into your account, an attorney might be able to advise you on what you can do to try and save your checks. Some individuals may be able to avoid having their checks garnished by not placing the check into a bank account. Keep in mind, that if your check is set for a direct deposit this option won’t work.
Other ways to stop your stimulus checks from being garnished may be to redirect the stimulus payment. Some individuals may be able to put the payment onto a prepaid card or a credit union. Some debt collection agencies won’t serve smaller banking institutions. Many of these banks lay low under the radar from debt collectors.
Filing Bankruptcy to Stop My Wages From Being Garnished
If you are facing wage garnishment, filing bankruptcy may be an option for you. Bankruptcy courts are still open during the coronavirus pandemic. Many bankruptcy hearings are being held telephonically. When an individual files
bankruptcy, an automatic stay is initiated. An automatic stay prevents creditors from garnishing wages or collecting on past due debts. Filing bankruptcy before getting your stimulus check may be an option if you have a large amount of debt.
In chapter 7 bankruptcy, your debt is eliminated. This allows individuals in debt to start over. As soon as a bankruptcy petition is filed with the Bankruptcy Court, a wage garnishment stops. This can provide a lot of financial relief for individuals if you are struggling to pay your bills.
Bankruptcy was created as a tool to help individuals get out of debt and start over. Individuals looking to file bankruptcy must qualify. Speaking with an experienced bankruptcy lawyer is important to ensure that you can and should file bankruptcy.
A good bankruptcy lawyer can go over what options are available to you. Most bankruptcy lawyers will sit down, review your finances and try to advise you on your options. Individuals facing wage garnishment can be severely impacted. A bankruptcy lawyer may be able to help negotiate your debts with your creditors.
If you are worried that a debt collector is going to garnish your stimulus check and have more questions, you can contact our office. Our debt lawyers are here to
answer any questions you may have. You can contact us by calling 973-979-9078 or emailing us at karra@klkbankruptcylawyer.com.