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As we await news regarding a new stimulus package, a lot of people are questioning if their stimulus checks can be taken from them because of some owed debt.
In general, your stimulus check cannot be taken from you to cover a debt but there are some exceptions and some of these may or may not apply to a second stimulus check.
A lot of people did not receive stimulus checks as they expected over the summer or if they did receive checks, the amount they received may have been lower.
I remember receiving a lot of comments of people questioning whether or not the IRS had accurately calculated the amount of stimulus aid to due.
For some of these people, it’s very possible that their payment amounts were affected by certain types of debt.
The good news is that the Cares act did include protections to keep state and federal agencies from taking your stimulus check to cover most of the debts owed to the government.
When it comes to private entities, such as private banks and creditors, some might be able to seize a payment to cover outstanding debt.
It’s worth noting that some states, including California have issued orders that prevent banks and creditors from garnishing your stimulus check.
One of the more recent proposals would prevent banks and creditors from being able to garnish your stimulus checks.
And if Democrats do take control of the Senate I think you could expect to see this protection built-in to the next relief package.
You also should be prevented from being forced to take funds from your stimulus check to cover expenses for things like care facilities, nursing homes, and landlords.
The big surprise from any people was that if they owed back child support, that could be taken from their stimulus check amount owed.
There were some mistakes that were made in the process of handling these cases though.
For example, the government was taking stimulus check funds meant for the current spouse of the parent paying child support.
So if your spouse or child support but you did not, your check may have been garnished by the government.
Luckily, the government was able to figure that out and allow people to claim their due money.
If the Democrats take control of the Senate, you can also probably count on this rule getting changed. It’s very likely that they will not garnish overdue child support although a Republican led bill may leave it at the status quo.
So basically when it comes to the next round of stimulus checks, there is a chance that you will not have to worry about your stimulus checks getting garnished.
Even if you owe back child support, that might be exempted with the next round and there may also be a prohibition against private lenders from garnishing your stimulus funds.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.