Can Bill Collectors Take your $1,400 COVID-19 Relief Check?

2021 Stimulus and Bankruptcy - What you need to know

Your COVID-19 Stimulus check can be taken by creditors!

Here’s how to protect it!

Everyone is looking forward to the stimulus relief checks. Including creditors.

Heads up!  You need to know that your $1,400 stimulus check under the third round of direct COVID-relief payments could be taken by your creditors. And, you may get more than one check, according to a recent article at cnet personal finance posted March 13, 2021.

Although creditors cannot intercept the second stimulus check, if you’ve been sued, and the stimulus check is in your bank account, a judgment creditor can garnish it. The stimulus bill provides no protection from your creditors, and your check could be at risk.

Consumer protection groups are asking for protection, but until that comes, if it does, there are steps you can take to protect your COVID relief stimulus check.

Generally, judgment creditors can garnish money in your bank account unless the money is protected. 

In Ohio, however, Attorney General, Dave Yost, warns creditors not to try to garnish the second stimulus check.  In a recent news release, 4/13/2020, Yost says that Ohio Revised Code 2329.66 (A) (12) (d) protects the second Covid stimulus checks. 

Sometimes State Law provides protection greater than the Federal Law does, Yost noted. However, there exceptions to the Ohio protection. For example, the second COVID-19 stimulus checks are not protected from being taken to pay past due child support.  If you owe back child support, the CARES Act provided reduction to the first COVID stimulus payment for back child support. However, the second and third stimulus payments can’t be garnished for back child support.  

How to protect your second stimulus check

If your state law doesn’t protect the stimulus, or if you just want to be cautious (and you should, if any of your creditors have sued you), you might consider putting your second stimulus check, and all of your money, for that matter, into an account you don’t have your name on.  This is because a judgment creditor can only garnish an account with your name on it.

2021 Stimulus and Bankruptcy - What you need to know

In general, if you have a judgment against you, you should not have your name on any account with your name on it, even if the money is not yours, the bank could freeze the account, and you would need to go to court to show that the money isn’t yours to prevent the creditor from taking it to pay your judgment.

The second COVID stimulus check is meant to address the pandemic emergency, substitute for lost future income, and pay living expenses.   The money was not intended to be used to pay old debts you’ve been sued on. But that won’t stop creditors from trying to take your second COVID relief stimulus check.  Know your rights if you have a judgment filed against you. 

And, remember that without a judgement, creditors cannot garnish your bank account. They first have to sue, and win, and get a judgment before they can garnish any money, including the COVID stimulus money, and then only if the law of your state permits it.  In Ohio, this money is protected by state law.