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VERIFY: Can your stimulus check be seized by banks or private debt collectors?

The Verify team has gotten a lot of questions about garnishing and private debt collectors with this round of virus relief aid. Here's a breakdown.

WASHINGTON — The Verify team is here to get the facts and is all about dispelling misinformation when it spreads online. We’ve received a lot of emails about the latest stimulus checks and if anyone can legally take the money away from you. 

One viewer, David from Maryland, asked the Verify team:

“The last 600 stimulus checks were not subject to child supports and other garnishments. Are the 1400 checks exempt as well?” 

So let's Verify: 


Can the third round of stimulus checks be garnished by either the government or private debtors?


It depends on the type of debt that you have and who would be attempting to collect it. Like the previous rounds of stimulus checks, this aid can NOT be garnished by the federal government or the IRS. But it could be potentially garnished from private companies.



With the third round of stimulus checks expected to hit qualifying American's bank accounts shortly, many have been wondering if there is any way that money can be taken away from them.

Just like in the past, these stimulus checks can't be garnished by the federal government or the IRS, including matters like federally collected child support.

Henry Grzes is from the American Institute of CPAs. He said that while the IRS and the federal government can't garnish your check, private companies can.

“It’s quite possible that it could be garnished, depending on the type of debt you owe," Grzes said. "If you’re behind on credit card payments and the credit card company has filed a judgment against you," Grzes said. "And it’s if you have other private debt. They will be able to access that.” 

And our viewers aren’t the only ones who noticed. 

Nineteen financial groups signed a letter to Secretary of the Treasury Janet Yellen urging Congress to pass a stand-alone bill that would protect these checks from being garnished.

RELATED: VERIFY: Explaining the new child tax credit expansion under the COVID relief bill

“We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment," the letter reads in part. "Otherwise, the families that most need this money, those struggling with debt and whose entire bank accounts may be frozen by garnishment orders, will not be able to access their funds.“ 

So far, no such bill has been signed into law.

As for ways to prevent the garnishing, Grzes says you could try and close your bank account. This would force the IRS to send a check to your home instead. This would delay when you get your payment.

There are efforts on the state level to stop the garnishing of these payments by private debtors. In Maryland, Gov. Larry Hogan signed an Emergency Order that makes these payments exempt from garnishments. 

"All financial institutions are hereby ordered not to hold an ARPA Act Recovery Rebate of the judgment debtor under a writ of garnishment," the E.O. said in part. "And to treat ARPA Act Recovery Rebates as protected amounts under Maryland Rules." 

So we can Verify that as of now, checks can be garnished by private companies, although there are efforts on the state and federal level to stop this.

RELATED: VERIFY: Who qualifies for the third round of stimulus checks?

RELATED: VERIFY: Explaining the new child tax credit expansion under the COVID relief bill

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