Can my CARES Act stimulus check be taken by creditors? The unfortunate answer is 'yes.'

By Tracy L. Hirsch

If you’re worried about your stimulus check being taken, here’s what you can do to prevent that from happening.*

Over this past month in the United States, millions of stimulus checks have gone out to individuals who meet the income and household requirements.

While some have received their payments, there are still others who are waiting for a direct deposit or a check in the mail, including many Louisville residents.

If you have creditors coming after you for (months or years worth of) unpaid debt, there are two ways that you can protect your stimulus check:

If a creditor has sued you, any money that’s in your bank account can be garnished, including your stimulus payment.

1.) Remove the money from your account as soon as you receive it. If you have creditors coming after you, and your stimulus check was recently deposited into your bank account, it is best to take the money out of your account to use it to pay for groceries, gas, and other necessities.

Once you have the cash in your hand, creditors cannot take that from you.

However, if the money is sitting in your bank account, they can legally obtain permission to take it out in order to get a payment for the debt that you owe them. This is called a “garnishment.”

If your stimulus check is going to be mailed to you instead of being directly deposited into your bank account, you should cash the check at the bank when you receive it instead of depositing it into your bank account.

If your bank is only currently offering virtual assistance, then you can do a mobile deposit of the check, and as soon as it gets approved, go to your bank’s ATM, and take out all of the money.

2.) File for bankruptcy if you qualify.

If you haven’t received your stimulus check yet, and you have creditors coming after you, it may work in your favor to file for bankruptcy. That way, when your check comes in the mail, your creditors won’t be allowed to go into your bank account to take it out (and any other funds that you have in there).

When you file for bankruptcy in Kentucky, it immediately protects your paycheck and the money in your bank account. This is due to a bankruptcy rule called the “Automatic Stay,” which means that once you have officially filed for bankruptcy, creditors can’t take your house, car, or paycheck, and the money in your bank account stays in your bank account.

Just like a tax refund, you can also use your stimulus check to pay for the filing fees and attorney fees needed to file your case. If you’re unsure whether or not bankruptcy will benefit you, you can set up a free consultation with me. I am currently offering phone consultations, where you and I can discuss your options from the comfort of your own home.

Want to  learn more about my virtual consultations? Click here to get all of the details!

You can text or call my personal cell phone 7 days a week at (502) 435-2593. Remember, we’re in this together, and I’m here to help.

All the best,

Tracy L. Hirsch


* The content in this article should not be construed as legal advice. If you need legal advice, you can set up a free phone consultation with me or meet with any local, licensed bankruptcy attorney. *

Need a free consultation? Text or call me at (502) 435-2593!

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