Who can Garnish my Stimulus Check?
As the saying goes, "Follow the money". The money in question here is your government stimulus check. #stimuluscheck
Think of this as a video game, with the player (you) trying to get home with hard dollars in your hand. Along the way there are several times others will attempt to get those dollars from you, leaving you empty handed by the time you get home.
Understanding this problem requires looking closely at a couple of different areas - tax law and Texas garnishment law. Without getting to technical, here is a quick summary:
Normally, any government issued dollars are subject to offset by the IRS to pay off a government obligation. The most common is are an IRS debt and a federally insured student loan. The IRS would take any refund earned and apply to those obligations. The current Presidential Order prevents the IRS from making those offsets, at least until August.
As with all things there are exceptions. The main exception at this time is a child support obligation enforced by a state order. Other exceptions may exist, but none are publicized, yet.
So, first hurdle cleared, second one coming - non-governmental creditors.
The easiest to understand is the bank at which you have your account. You received your stimulus check electronically or via a paper check - either way it went into your account. Now, as with any deposit, the bank is going to check if you owe them any money, offset that amount, then give you credit.
For example, lets say you were overdrawn when your check hits the bank. The bank will take that amount to cover its loss, then credit you the balance if any.
The bank will also check is you owe them any money for a debt such as a car loan, mortgage, unsecured line of credit or other. Buried in your loan documents is a clause giving the bank the rick to offset any amount owed to them against any money in your deposit accounts. So if you them a couple of payments your stimulus check could go to the bank.
Still good? One more hurdle. Lets say a creditor took a judgment against you. They now have the right to file a writ of garnishment with the court allowing, directing your bank to turn over any funds in your account.
This is the scenario that played out with many people. Creditor attorneys, in conjunction with public interest lawyers and state Supreme Courts have entered into agreements temporarily stopping this practice.
As with all thing #COVID, this shines a light on an area that most people were not aware of and does not get much attention, or sympathy. Texas Tribune has a great article on this practice. Here is another article about USAA seizing offsetting bank accounts to cover debts owed.
#COVID will bring many changes to many areas of our lives going forward. I don't see Texas changing its consumer collection laws, or I should say expanding them. However, this is a lesson that planning can save us from unforeseen adverse consequences in the future.
#COVID #stimuluscheck #IRS
Think of this as a video game, with the player (you) trying to get home with hard dollars in your hand. Along the way there are several times others will attempt to get those dollars from you, leaving you empty handed by the time you get home.
Understanding this problem requires looking closely at a couple of different areas - tax law and Texas garnishment law. Without getting to technical, here is a quick summary:
Normally, any government issued dollars are subject to offset by the IRS to pay off a government obligation. The most common is are an IRS debt and a federally insured student loan. The IRS would take any refund earned and apply to those obligations. The current Presidential Order prevents the IRS from making those offsets, at least until August.
As with all things there are exceptions. The main exception at this time is a child support obligation enforced by a state order. Other exceptions may exist, but none are publicized, yet.
So, first hurdle cleared, second one coming - non-governmental creditors.
The easiest to understand is the bank at which you have your account. You received your stimulus check electronically or via a paper check - either way it went into your account. Now, as with any deposit, the bank is going to check if you owe them any money, offset that amount, then give you credit.
For example, lets say you were overdrawn when your check hits the bank. The bank will take that amount to cover its loss, then credit you the balance if any.
The bank will also check is you owe them any money for a debt such as a car loan, mortgage, unsecured line of credit or other. Buried in your loan documents is a clause giving the bank the rick to offset any amount owed to them against any money in your deposit accounts. So if you them a couple of payments your stimulus check could go to the bank.
Still good? One more hurdle. Lets say a creditor took a judgment against you. They now have the right to file a writ of garnishment with the court allowing, directing your bank to turn over any funds in your account.
This is the scenario that played out with many people. Creditor attorneys, in conjunction with public interest lawyers and state Supreme Courts have entered into agreements temporarily stopping this practice.
As with all thing #COVID, this shines a light on an area that most people were not aware of and does not get much attention, or sympathy. Texas Tribune has a great article on this practice. Here is another article about USAA seizing offsetting bank accounts to cover debts owed.
#COVID will bring many changes to many areas of our lives going forward. I don't see Texas changing its consumer collection laws, or I should say expanding them. However, this is a lesson that planning can save us from unforeseen adverse consequences in the future.
#COVID #stimuluscheck #IRS
