Debt Collectors Should Leave Your Stimulus Check Alone

Thanks to the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act for short), adults who make less than $75,000 a year qualify for a one-time $1,200 stimulus payment. Couples get $2,400. Families with children under age 17 get an extra $500 per child. If you haven’t received your stimulus payment yet or you’re not sure if you qualify, visit the Economic Impact Payment Information Center on the IRS’ website.

"Collection Bureau" by Tony Webster is licensed under CC BY-SA 2.0

If you have received your stimulus payment, you might be wondering if debt collectors can take your check before you even get a chance to spend it on rent, utility bills, or groceries. The short answer is that Kentucky law protects your stimulus payment from being levied (or taken) by debt collectors. (You should know though that the government can take your stimulus check if you’re behind on child support.)

Here are three reasons why debt collectors should leave your stimulus check alone:

1. Kentucky law protects public assistance from levies. Public assistance is any “money grant” for people who are:

• Low-income and elderly,

• Low-income and blind,

• Low-income and permanently disabled or totally disabled,

• Low-income children,

• Low-income households with children, or

• Any family that includes people from more than one of these categories.

If you or someone in your household falls into one of those categories, a debt collector shouldn’t take your stimulus payment. If you receive the Earned Income Tax Credit (EITC) with your tax refund, your stimulus payment is public assistance which means it’s protected from debt collectors.

2. But what if you don’t think you fit in one of those public assistance categories? Your stimulus payment is still protected as compensation for loss of future income. Congress put stimulus payments into the CARES Act because they knew the coronavirus pandemic would cause some Americans to lose income. So if a debt collector tries to take your stimulus payment, they’re taking money that was meant to replace lost income, and they’re violating Kentucky law.

3. Finally, taking your stimulus payment while courts are closed is unconstitutional. Kentucky courts are closed (except for emergencies) until May 31, 2020 because of the pandemic. Kentucky’s Constitution gives you the right to a hearing if you want to challenge a debt collector taking your money. A debt collector would be violating your constitutional rights by taking your stimulus payment during a time when you can’t get a hearing.

Even though debt collectors shouldn’t take your stimulus payment, they might still try. If a debt collector takes your stimulus check (or your unemployment insurance check – that’s protected too!), you should start by calling your local legal aid program to see if they can help.

To find what legal aid program covers your county, visit https://www.lsc.gov/what-legal-aid/find-legal-aid.