Your 3rd Stimulus Check May Not Get to You. Here's Why.
By Tracy L. Hirsch
The third round of stimulus checks are being delivered, but some checks may be intercepted. Here’s a quick rundown of why it might happen and how to prevent it.
Who is at risk of losing their stimulus payment?
Congress has recently authorized the distribution of new stimulus checks in the amount of $1400. The downside is that some individuals who have unpaid debt might have those funds garnished.
A garnishment is when a creditor is legally authorized to take money out of a debtor’s bank account or paycheck in order to pay off the debt that is owed.
The first two stimulus checks were protected from being taken by private creditors, but this third stimulus payment is part of a ‘budget reconciliation,’ which means that debts such as state taxes and private loans can be taken under a garnishment.
If you owe federal taxes, the IRS won’t garnish your bank account, but if you owe state and/or local taxes, medical bills, credit card debt, and so on, there’s a good chance that your stimulus check will be intercepted.
Your third stimulus payment is at risk if you have unpaid debts that are owed to private lenders.
What can I do to prevent that? There are two main actions that you can take immediately:
1.) If your first two stimulus checks were directly deposited into your bank account, you can close your account to ensure that your third stimulus payment won’t be direct-deposited.
A direct deposit can be taken by your creditors if they garnish your bank account. However, if your bank account is closed, your stimulus check should come in the mail in the form of a check, and you can cash it at a check casher location or store.
The downside is that you’ll have to pay a fee to cash a check without a bank account, but at least you’ll have the cash in-hand to pay for necessities.
If you haven’t received your stimulus payment yet, you can track it on the IRS website. Go to this page and click on the blue button that says “Get My Payment,” and follow the prompts:
https://www.irs.gov/coronavirus/get-my-payment
2.) If you have unpaid debt, you could benefit from filing for bankruptcy. You could even use your stimulus check to cover the filing and attorney fees. What are the benefits of filing for a personal bankruptcy?
a.) It will protect your paychecks and bank account from being garnished by other creditors. If a creditor comes after your stimulus payment, then it’s highly likely that they’re going to come after your paychecks (if they haven’t already).
b.) You’ll be able to either get rid of your debts altogether (in a Chapter 7) or set up an affordable, interest-free repayment plan to pay some or all of your debts back (Chapter 13).
c.) If you have judgment liens against your property or you recently received a foreclosure notice, filing for bankruptcy could help you remove those liens and save your home from being taken by your mortgage lender.
How do I know if bankruptcy can help my specific situation?
Meet with an experienced local bankruptcy attorney to discuss your options. I offer free consultations if you want to see if bankruptcy can protect you. Now is a good time to file for bankruptcy, since you could use your stimulus payment or tax refunds to pay for the filing fees.
You can text or call me at (502) 435-2593, and I will personally respond and talk to you directly.
There’s no pressure to file. I’ll provide you with helpful information at no cost to you, and you can ultimately make the decision to do what you feel is best for you and your family.
If you’re ready for a fresh start, let’s talk. I’m here to help you!
Sincerely,
Tracy L. Hirsch
Louisville KY Bankruptcy Lawyer
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