Over the past couple of weeks, the Internal Revenue Service and U.S. Treasury have worked tirelessly to send out a hundred twenty-seven million coronavirus relief checks under the $1.9 trillion American Rescue Plan to financially struggling Americans.
However, there already have been reports of honest taxpaying Americans who never got their hands on the much-needed cash.
The reason? Unpaid debts that are overdue.
According to the details of the American Rescue Plan, stimulus check money cannot be garnished for unpaid federal debts or back taxes, but the $1,400 checks can indeed be garnished for unpaid private debts—such as medical bills or credit card debts—if they are subject to a court order.
Garnishment is a court order that allows for money to be removed from an individual’s bank account, and banks generally have to comply with a court’s demands.
In light of this, at least six states—Maryland, New Jersey, Washington, Massachusetts, Nebraska, and New York—are taking action to shield the most recent round of stimulus checks from private debt collectors after Congress failed to exempt the money from garnishment.
Washington did, however, green-light garnishment protection measures for the $600 stimulus payments that were approved in December.