By now, you have most likely heard that the United States government is handing out $1,200 per person to those who have been affected by the coronavirus outbreak.
Firstly, if you are wondering if you are eligible for this $1,200 check from the US government, visit this post here. Moving on, the $1,200 comes under the US government's Coronavirus Aid, Relief, and Economic Security (CARES) Act, and will wire the funds directly into millions of Americans' accounts very soon. While all that sounds fantastic, and it will certainly help people who need it, what if you have outstanding debt? Can the bank claim your $1,200 stimulus check?
According to audio obtained by The American Prospect from a Treasury Department web conference with banking officials, Ronda Kent, the chief disbursing officer with the Treasury's Bureau of the Fiscal Service says that banks inquired "whether these payments could be subject to collection from the bank to which the money is deposited, if the payee owes an outstanding loan or other payments to the bank." The response was this, "there's nothing in the law that precludes that action."
It is known that Congress did exempt the CARES Act payments ($1,200) from collection if that debt is owed at a federal or state level. Since the payment of $1,200 is technically a tax credit, the debt collection exemption doesn't apply to private debt collectors, which means portions, or the whole $1,200 can be claimed.
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