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Your stimulus check could disappear before you ever see it, thanks to debt collectors

March 12, 2021, 4:12 PM UTC

Update: Stimulus checks will be shielded from some debt, but still not collectors

While millions of Americans are eagerly awaiting the third round of stimulus checks from the government, the people who need the money the most might never get their hands on the $1,400 relief payment.

Debt collectors, who weren’t able to garnish stimulus checks in previous rounds, will now be able to seize the money. It’s an Achilles’ heel in the $1.9 trillion American Rescue Plan that could keep the payments from using the money for urgent expenses like food and housing.

The change in exemption comes because the relief package was passed via budget reconciliation, rather than as a stand-alone bill. That let Democrats avoid a possible filibuster from Republicans, but it created the opening for collectors.

Banking groups are urging Congress to close that loophole.

“We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment,” a group led by the American Bankers Association wrote in a letter to congressional leaders Tuesday. “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.”

And Oregon Sen. Ron Wyden (D), chairman of the Senate Finance Committee, said he intends to file separate legislation to do just that.

With checks going out as soon as this weekend, though, there’s no guarantee that legislation will pass in time. While stimulus money can’t be seized to pay back taxes, child support, or government debts, private collectors—especially aggressive ones—could make a run for the money when it hits bank accounts.

The latest stimulus bill will feature the largest cash payments to citizens yet. Individuals earning $75,000 or less are eligible to receive $1,400, and couples earning $150,000 or less will receive a check worth $2,800. Households will receive an additional $1,400 for each dependent child.

Stimulus check tracker: Why you may see ‘Payment Status Not Available’—or a pending direct deposit in your bank account