Amid the ongoing challenges of the pandemic, receiving a stimulus payment can offer a much-needed financial reprieve. However, many are unaware that these funds might not be fully protected from debt collectors.
With the right knowledge and strategies, you can take steps to safeguard your stimulus payment. In this post, we'll explore how debt collectors might target your stimulus check and what you can do to prevent it.
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The American Rescue Plan
The American Rescue Plan is distributing $1.9 trillion in stimulus funding. The issue is that this bill was passed under certain budgetary rules that prevent creditors from garnishing the payments. There are some attempts underway to block this garnishment, but nothing has been successfully addressed as of the time of writing.
The CARES Act in 2020 also did not have garnishment projections but state and local jurisdictions were able in many cases to prevent garnishment.
Who Is Getting the Stimulus Checks?
The broadest category for the stimulus check requires you to be a US citizen or US resident alien, not claimed as a dependent, and have a valid Social Security number for employment. Immigrants must have green cards or H-1B and H-2A work visas to be eligible.
Financially, if you have an adjusted gross income of $75,000 or less for single filers; $150,000 or less for joint filers; or $112,500 for head of household, you are eligible for the full $1,400. You should also get $1,400 for each dependent child.
If you make between $75,000 and $80,000 (single filer), $150,000 and $160,000 (joint filers) or $112,500 and $120,000 for head of household, your payments will be less.
Students older than 17 were not included in the last two stimulus packages. For this package, all dependent children will receive $1,400, based on the financial guidelines stated above.
Senior citizens and disable people are eligible for a check regardless of their dependency status.
Deceased People
If you lost a loved one in 2020, they may qualify for their relative to receive money through the
Recovery Rebate Credit. Check with a tax preparer to see if your loved one qualifies.
A deceased person is not eligible for payment under this current plan. If you receive a check, contact the IRS.
Low-Income Non-Filers
If you fall into this category and do not receive Social Security benefits, check the
IRS.gov website for a portal that will allow you to put in your information so that you can receive a check.
Ways to Prevent Garnishment
There are two ways to
stop your stimulus payment from being garnished. One is to open a new bank account and send the direct deposit information to the IRS immediately. The other is to contact your state and federal lawmakers and urge them to put some sort of protection in place. Neither is guaranteed to work, but it can’t hurt!
If you are in a position where a $1400 check will not help with your bills, you may need Pacific Debt Inc.’s services.
Recent Regulatory Changes
The
Consumer Financial Protection Bureau (CFPB) issued new rules in 2022 that impact some debt settlement practices. Specifically, new requirements exist around extra client disclosures for settling accounts under $500.
Here at Pacific Debt, we closely monitor changes like these to ensure we maintain compliance and the highest ethical standards.
We have implemented the following CFPB-mandated processes:
- Providing Enhanced Disclosures: For any proposed debt settlement offers under $500, we now provide clients an additional 1-page disclosure form 3 days before settling the account. This summarizes fees, impacts, and alternatives.
- Extended Right To Cancel: For these sub-$500 accounts, clients now have 5 days after settling where they can request to cancel the settlement terms with no penalty.
- Strict Data Privacy: We have fully updated systems and tight controls around storing and accessing client information to align with the newest data privacy rules.
- Ongoing Employee Training: Our entire staff completes CFPB-mandated training every 6 months on updated regulations and requirements.
Rest assured we will continue adapting to reflect the latest regulatory landscape, while still delivering the quality debt relief services our clients expect.
Alternatives To Debt Settlement
While debt settlement is often an optimal path, it's not the only option.
Others include:
Debt Consolidation Loans
- Pros: Lower interest rate, consolidated payment
- Cons: Credit score impacts, payment timeline unchanged
Balance Transfer Credit Cards
- Pros: 0% intro APR, lower ongoing interest
- Cons: Balance risks later accumulating more interest
Credit Counseling
- Pros: Payment program guidance, some interest rate reductions
- Cons: No actual debt reduction, all balances still due
Bankruptcy
- Pros: Much debt eliminated, collections calls end
- Cons: Major credit score damage, assets may liquidate
As you can see, all options have tradeoffs. Based on your financial situation, debt settlement may provide the best overall results. Our experts can advise further during your free consultation.
Client Success Spotlights
Lee was struggling with over $14k in credit card debt across multiple cards. After being laid off, he knew he couldn't pay it down himself. Our program helped Lee save over $9k by negotiating his balances down to under $5k total.
Sylvia found herself suddenly overloaded with $35k in medical bills she couldn’t afford after an unexpected surgery and hospital stay. She felt helpless but found hope in partnering with Pacific Debt. Sylvia is now on her way to becoming 100% debt-free after settling for a fraction of what she owed.
Alberto had racked up $12k in credit card debt and collections calls were a daily stressor. He shares, “Pacific Debt restored peace in my life again after they worked relentlessly and got my total debt wiped clean for less than $2k.”
You can read more details on Lee's success story
here, Sylvia's transformation
here, and Alberto’s blessing
here. We have helped thousands like them escape the debt trap once and for all!
Key Questions To Ask
Before choosing any debt relief provider, make sure to ask these key questions:
- What specific services and results can you guarantee?
- What fees will I pay and when are they due?
- Are you a fully accredited and compliant company?
- Can I see examples of past client settlements?
- How could this impact my credit score?
- Who handles my accounts - employees or 3rd party debt collectors?
- What protections come with your service package?
Contact Pacific Debt today to get answers to all these important questions and more.
FAQs
Pacific Debt, Inc
Pacific Debt, Inc. is an award-winning debt settlement company. If you’d like more information on how to get out of debt, we are happy to help. We will explain all your options and help you decide which is the best option for you. We can even refer you to trusted partners who can better meet your needs.
If you have more questions, contact one of our debt specialists today. The initial consultation is free, and our debt experts will explain your options.
Conclusion
As we have explored, the recent stimulus payments offer welcome relief but lack enhanced debtor protections. While garnishment won't impact all recipients, for those facing unpaid debts it poses a concern.
When combined with pandemic hardships, ongoing inflation pressures, and the constantly evolving regulatory landscape, managing financial health can feel overwhelming.
Luckily, reputable debt relief partners like Pacific Debt serve as beacons guiding the way to brighter, debt-free tomorrows. Equipped with education, empathy, and decades of combined experience, we provide the clarity and solutions needed to overcome debt.
We encourage anyone struggling with unpaid medical bills, loans, credit cards, or other debt to connect with our experts for a free, no-obligation consultation. Learn about customized programs tailored to your unique situation. Discover available options matched to your needs. Let us stand by your side and lift the debt burden from your shoulders for good.
The first step is yours -
contact us today and start your recovery journey!
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