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Keith Barrington Allen Says Private Debt Collectors Should Not Garnish Wages from Stimulus Checks

March 26, 2021

Thanks to the passage of the $1.9 trillion COVID-19 relief package bill, many people have already received another round of stimulus, or economic impact, payments, while some still have to wait for their payments. However, some of those recipients who are falling behind on their bills may be surprised to learn that part of the checks may be garnished. Keith Barrington Allen, attorney at law at Hobson-Williams, P.C., says stimulus checks should not be subject to garnishment because those payments are targeted to those who need it most.

The recently approved American Rescue Plan provides checks of $1,400 to individuals making $75,000 or less annually. But, unlike the previous round of stimulus payments that protected debtors from garnishments, the Plan offers no such protections. The first round of payments under the CARES (Coronavirus Aid, Relief, and Economic Security) Act also allowed payments to be garnished, but some states and local municipalities put laws in place to stop creditors from taking part of the money from their constituents.

“The fact that the debt collectors can garnish wages under the American Rescue Plan undermines the purpose of which this legislation was passed,” Mr. Allen says. “This stimulus payment and prior payments are being used by families struggling to pay rent and buy food for their families.”

Mr. Allen, who concentrates his practice in landlord/tenant matters, says the garnishments would have a devastating impact on the housing market, affecting renters and landlords alike. “The tenants we serve had a hard time paying rent, even before the COVID-19 pandemic,” he says.

“Now, although these eviction moratoriums are in place, tenants still have to pay rent, but with little income or no income at all,” Mr. Allen says. “Allowing creditors to seize the funds would plunge these tenants into further debt to their landlords, increasing the likelihood of eviction once the moratoriums are lifted. The landlords we serve will also be affected as they are struggling to keep their houses from going into foreclosure due to the impact of COVID-19 on their tenants.”

To help protect those in debt, U.S. Senator Ron Wyden of Oregon announced he is introducing legislation that would protect people’s stimulus checks from garnishment. The American Bankers Association likewise called on U.S. Treasury Secretary Janet Yellen to stop economic impact payments from being subject to seizure by private debt collectors.

To protect these payments from garnishments, Mr. Allen suggests that the American Rescue Plan should be reworked so that the stimulus checks should be treated as a form of government assistance that provides financial assistance to those in need.

“I believe the American Rescue Plan is overly broad in application, in that, if creditors should be allowed to seize people’s stimulus checks, our most vulnerable and poverty-stricken populations should be protected,” he says. “What I find most concerning about this legislation is the impact this would have on our elderly population, especially those who are living near the poverty line and do not have the financial resources, like an IRA or a 401(k), to live above their means. Many of them do not have family members to assist them and these stimulus checks can go a long way to pay for food and other necessities.”

 

Testimonials

“I want to take this time to thank Tanya and Keith for their professionalism and their ability to keep me calm during this process. Tanya was very helpful in explaining the whole guardianship process and my next steps. Despite my numerous emails, I never felt ignored or that they were growing weary of me. Even after being granted guardianship when I had an issue with the bank releasing money Tanya stayed calm and found a way to get what I was entitled to. I hope I never need to do this again but if I do, I will definitely come back to Tanya and her team. Thank you Thank you Thank you. Love from Bermuda.”

-K. Durham.
(An attorney in Bermuda transferring a Bermudian guardianship to NY)

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