Banks join calls to shield stimulus checks from debt collection

A growing chorus of voices is calling on Congress to protect the stimulus checks being sent to Americans across the nation this week from debt collection.

A consensus has emerged that the recent $2 trillion package for easing economic fallout from the coronavirus allows banks to use a consumer’s piece of the stimulus to fulfill garnishment orders to pay creditors for outstanding debts.

The issue has put banks in a bind. To avoid diverting customers’ stimulus money, they would need to suspend collection of overdraft fees, for example, and in many cases banks are obligated to fulfill court-required garnishment orders. Yet the industry has been widely focused on efforts to help consumers weather effects of the pandemic. Some large banks have already suspended collecting on negative checking balances to avoid garnishing stimulus checks.

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