Coronavirus stimulus checks could be swiped by debt collectors, officials warn

Debt collectors can seize the new stimulus checks. Lawmakers are trying to fix that

Coronavirus stimulus checks could be swiped by debt collectors, officials warn

Washington (CNN)The latest round of stimulus payments that started going out over the weekend are open to being seized by private debt collectors — a problem lawmakers are rushing to fix.

Recipients with unpaid credit card or medical bills for which a company has obtained a judgment against the debtor could see the fresh infusion taken from their bank accounts, potentially preventing those in need from getting the emergency cash.

Sen. Ron Wyden, a Democrat from Oregon, plans to introduce a fix that would shield the payments from garnishment as early this week, according to a spokeswoman.

But for now, it's possible collectors could seize the money, worth up to $1,400 per person, that the federal government is directly depositing into people's bank accounts.

“We really wish this could have passed before the money started going out. The protection would have been far more effective if the payment was coded in a way so that banks would automatically know to protect the money,” said National Consumer Law Center associate director Lauren Saunders.

Lawmakers shielded the $600 payments that were approved as part of the December stimulus, but the latest Covid relief bill did not include that protection because of the procedural rules Democrats used to push the bill through the Senate, where no Republicans signed on.

The relief bill passed in last March, known as the CARES Act, also failed to include language protecting the first round of stimulus payments, worth up to $1,200, from private debt collectors. A standalone Senate bill that would have shielded the payments was passed by unanimous consent a few months later but was not taken up by the House.

A coalition of advocacy groups, ranging from the National Consumer Law Center to the American Bankers Association, are urging lawmakers to make the fix.

“Otherwise, the families that most need this money — those struggling with debt and whose entire bank accounts may be frozen by garnishment orders — will be not be able to access their funds,” the group wrote in a letter sent to Congressional leaders.

If the creditor has sued over the debt and there's a court order in place for garnishment, a bank must turn over the money by law, unless Wyden's proposed bill passes.

Who's eligible for a $1,400 check?

The third round of payments is expected to reach about 85% of families, according to the White House. Those whose bank information is on file with the Internal Revenue Service will ly get the money first, because it will be directly deposited into their accounts. Others may receive paper checks or prepaid debit cards in the mail.

Direct deposits started going out this weekend and additional batches of payments will go out over the coming weeks.

Families will receive an additional $1,400 per dependent, so a couple with two children could receive up to $5,600. Un prior rounds, families will now receive the additional money for adult dependents over the age of 17.

The full amount goes to individuals earning less than $75,000 of adjusted gross income, heads of households ( single parents) earning less than $112,500 and married couples earning less than $150,000. But then the payments gradually phase out as income goes up.

Lawmakers narrowed the scope of the payments this time so that not everyone who received a previous check will be sent one now. It cuts off individuals who earn at least $80,000 a year of adjusted gross income, heads of households who earn at least $120,000 and married couples who earn at least $160,000 — regardless of how many children they have.

Payments are shielded from other debts

The law protects the stimulus payments from garnishment for other outstanding federal debts, student loan or tax debt.

For the $1,200 payments authorized by the CARES Act last year, the payment was protected form all debts except delinquent child support. Congress expanded the exclusion for the second round of payments, worth up to $600, making sure the money would not be offset even for owed child support.

But there's another hurdle for people who were eligible but missed out on getting the earlier payments. An estimated 8 million households that didn't get the money sent directly to them, most commonly because the IRS didn't have their correct information on file. Very low-income people are not normally required to file taxes.

Those people are allowed to claim the payment as a credit on their 2020 tax return. But the none of the three Covid relief bills shield those tax credits from back debts — even federal ones.

An IRS spokesman told CNN last week that the agency is reviewing what might be possible to address the problem. Yet people who have filed their 2020 tax returns could already have lost out on the cash and won't have any way to get it back.

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Источник: https://www.cnn.com/2021/03/16/politics/stimulus-checks-debt-collectors-wyden/index.html

Second stimulus check: With no relief in sight, here are 6 places to turn for financial help

Coronavirus stimulus checks could be swiped by debt collectors, officials warn

The long-awaited second round of stimulus is still on the table, but the timeline for when Americans would actually see a new round of aid is still being held up in Congress.

© Pekic/Getty Images Father stressed about bills

Previously, it was the presidential and congressional elections slowing down the decision, but with the results slowly coming in, it sounds leaders are starting to shift their focus back to stimulus options. Senate Majority Leader Mitch McConnell says he is pushing to have a new coronavirus aid bill settled by the end of the year.

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Nonetheless, it's still unclear when these checks would actually hit Americans' wallets. And while an earlier Bankrate survey revealed that the $1,200 check wouldn't keep struggling Americans going for a month, the stimulus would certainly help cover day-to-day essentials and other timely payments.

If you’ve been financially affected by the pandemic, here are six places you can turn to for relief.

1. Reach out to your creditors and lenders

If you are struggling to make payments on your credit cards or loans, give your creditors and lenders a call to see if they'll offer any assistance. For example, you might be able to receive forbearance, which could help you get up to speed on other important payments.

Currently, mortgage borrowers can get forbearance up to a year under the CARES Act and some banks and credit issuers are even offering assistance to their customers who are struggling – you just have to ask.

2. Look into local community assistance programs

Sometimes help is around the corner, but you just have to do a bit of searching beforehand to find it.

A good resource for getting access to help is 211.org, which connects people to local assistance programs. For example, 211 can help you find food, pay housing bills or other essential services. They can even help you secure free or more affordable internet.

You can also give them a call at 211 and you'll be connected to someone who will help you find assistance nearby. United Way, for example, is one of the many partners that 211 may connect you with. The Salvation Army is another organization that may be able to help you out whether you're in need of housing or food assistance.

3. Use your emergency savings

Emergency funds are there for situations exactly this – so consider using them to help you get by during tough times. While it may sting to watch your balance go down, it's a better alternative to piling up debt.

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When deciding what to use your emergency funds towards, ask yourself this: Is the purchase or payment in question actually necessary for survival? This can help you limit your emergency fund spending so that it's only going toward the true necessities.

4. Consider a coronavirus hardship loan

Coronavirus hardship loans, a type of personal loan, were created as a response by banks and credit unions to help their communities. Un regular personal loans, these loans are designed as short-term relief: They offer more favorable terms, but they also offer smaller loan amounts that have to be paid back sooner. Typically, hardship loans are $5,000 or less.

The perk of taking out this type of personal loan is that the interest rates are lower, they're quickly funded after getting approved and you have the ability to defer your first payment up to 90 days.

These types of loans can really help with short-term relief, but remember that you still have to repay them or it could add on to your debt. Generally, this is what is required to qualify for a hardship loan:

  • You'll need a credit history that demonstrates positive behavior.
  • Typically, you must be a member of the bank or credit union where you're applying for the loan.
  • Some banks or credit unions may have deposit or income requirements.

To apply for a hardship loan, reach out to your bank or credit union to see if the financial institution is offering them.

5. Try to negotiate your bills

If you're struggling to pay some or all of the bills, try negotiating them rather than not paying them altogether. You can do this the old-fashioned way by calling up your service provider, explaining your situation and hoping that they'll cut you a break. Or there are services, such as Trim and Truebill, that will do the negotiating for you.

This ly won't be a windfall by any means, but it could seriously lower your bills and who doesn't love saving a couple of dollars here and there?

6. You can take an early withdrawal from your 401(k) penalty-free – but you should try to avoid it

If you've exhausted your emergency fund and would prefer not to take out any loans, then you may consider withdrawing funds from your 401(k).

Generally, this is not advisable or favorable as it comes with a 10 percent early-withdrawal fee penalty if you withdraw before the official retirement age of 59 1/2 .

However, that is currently waived until Dec. 31, 2020 under the CARES Act.

Only qualified individuals will be able to get this penalty waived on withdrawals up to $100,000.

You'll need to meet one of these criteria:

  • You experienced a layoff, furlough or reduced hours due directly or indirectly to the coronavirus.
  • You or a member of your household received a COVID-19 diagnosis.
  • You cannot work because you need to care for your child.
  • You had to close your business or reduce your hours due to the pandemic.
  • You suffered adverse financial consequences related to COVID-19.

While not having to pay the early-withdrawal fee may make this a tempting option, it's important to consider how an early withdrawal could impact your retirement plan down the road.

For instance, avoiding the 10 percent fee might sound a good deal now, but this doesn't take into consideration all of the compound interest you will miss out on had you let the funds be. According to a 2017 study by Mass Mutual, dipping into your retirement savings early could not only delay your retirement, but it could also reduce your overall savings by as much as 14 percent.

Learn more:

Continue Reading Show full articles without “Continue Reading” button for {0} hours. “,”author”:null,”date_published”:null,”lead_image_url”:”https://img-s-msn-com.akamaized.net/tenant/amp/entityid/BB1aLxAO.img?h=630&w=1200&m=6&q=60&o=t&l=f&f=jpg&x=857&y=214″,”dek”:null,”next_page_url”:null,”url”:”https://www.bankrate.com/banking/savings/second-stimulus-check-where-to-find-financial-relief-instead/”,”domain”:”www.bankrate.com”,”excerpt”:”If you’ve been hit hard by the pandemic and can’t wait around for more stimulus, consider these options.”,”word_count”:2,”direction”:”ltr”,”total_pages”:1,”rendered_pages”:1}

Источник: https://www.msn.com/en-us/money/personalfinance/second-stimulus-check-with-no-relief-in-sight-here-are-6-places-to-turn-for-financial-help/ar-BB1aLzRk

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