Third Stimulus Check Update - Debt Collectors Encouraged to Allow Payments to Reach Consumers | Summary and Q&A

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March 17, 2021
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Consumer Warrior
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Third Stimulus Check Update - Debt Collectors Encouraged to Allow Payments to Reach Consumers

TL;DR

Learn what to do if your stimulus check is garnished or if your account is overdrawn when the third round of stimulus checks arrives.

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Questions & Answers

Q: What should I do if my stimulus check is deposited into an overdrawn account?

Contact your bank and explain the situation, emphasizing that the funds are essential for basic living expenses. Banks have shown some willingness to work with customers in these circumstances.

Q: Are the third round stimulus checks protected from garnishment by private creditors?

No, unlike the previous rounds, this round does not have protections against garnishment, including by banks.

Q: Will financial institutions restore funds to individuals with overdrawn accounts due to stimulus deposits?

The Consumer Financial Protection Bureau has collaborated with banks to address this issue and many institutions have pledged to promptly restore funds to affected individuals.

Q: How can I avoid garnishment or overdraft fees with my stimulus check?

If you receive a preloaded debit card instead of a direct deposit, use that card to avoid potential garnishment or overdraft fees.

Summary & Key Takeaways

  • The third round of stimulus checks has been approved and will be deposited soon, raising concerns about garnishment and overdrawn accounts.

  • The Consumer Financial Protection Bureau has addressed the issue and worked with financial institutions to restore funds to individuals with overdrawn accounts.

  • Unlike the first two rounds, this third round does not have protections against garnishment from private creditors, including banks.

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