Debt Collectors Can’t Seize Stimulus Payments; All Evictions Are Banned

Debt collectors can’t garnishee money from the federal stimulus program, the New York Attorney General’s Office says.

Attorney General Letitia James issued official guidance to New York State banking institutions, creditors, and debt collectors, making clear that financial relief provided through stimulus payments are exempt from garnishment under New York law. The CARES Act– Coronavirus Aid, Relief, and Economic Security Act–authorized the U.S. Department of Treasury to send billions of dollars to Americans struggling as a result of the economic fallout of the coronavirus disease 2019 (COVID-19) public health crisis, but these emergency stimulus payments were not designated as exempt from garnishment, allowing debt collectors to potentially benefit before consumers.

“As the coronavirus crisis continues to wreak havoc on our society, I will do everything in my power to protect the wallets of every New Yorker,” James said. “Today, we are taking concrete action to ensure debt collectors keep their hands off New Yorkers’ stimulus payments. This official guidance makes clear that banks and debt collectors cannot freeze or seize stimulus funds that are on their way to New York families, and any institution that violates this guidance will face swift legal action from my office.”

Under New York law, certain types of property — including public benefits like public assistance, Social Security, and veterans’ and retirement benefits — are exempt from execution, levy, attachment, garnishment, or other legal process by a judgment creditor seeking to satisfy a monetary judgment. The New York State Court of Appeals has held that exemption statutes “are to be construed liberally in favor of debtors” because exemptions “serve the important purpose of protect[ing] the debtor’s essential needs.”

And public officials, including the Suffolk County Police Department, are reminding residents that no evictions are permitted at the moment.


Leave a Reply