Banks Can Take Your COVID Money

Banks Can Take Your COVID Money

( – Millions of Americans are eagerly awaiting the $1,200 per person promised in the $2.1-trillion COVID-19 relief package. But, astonishingly, some people may have that money taken straight out of their bank accounts before they even know it’s there. Private debt collectors and banks may attempt to lay claim to an individual’s bank balance as soon as funds are available — regardless of the source.

The intent of the relief package is two-fold. First, it’s designed to give citizens across the country a bit of an offset from any lost or reduced income due to all the lockdown orders in effect. Secondly, it’s aimed at putting money into local gut-punched economies where people buy food and other necessities. While Congress forbade banks from using the funds to pay off private debt collection in the same manner as other federal programs like Social Security Disability payments, they did not give that protection to others.

The CARES Act does allow for the Treasury Department to exercise its rule-making powers to extend this protection to all recipients, but they’ve not shown any indications they’re planning to do so. This has prompted dozens of State Attorneys General and several Congresspeople to petition the department to issue such an order.

The upshot is, people who owe money to the banks for overdraft and other fees or whose creditors have been granted Orders of Garnishment by a court may never see the money. The looming question now is: will the Treasury heed pleas coming their way in time, or not?

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