Stimulus Funds are Protected from Creditors in Minnesota
News stories such as this one have been making the rounds online over the last 24 hours, and I have gotten numerous questions from clients and potential clients worried that creditors can take their stimulus payments that will be paid in March, 2021. Apparently Congress did not protect these funds from creditors like they did in prior rounds of stimulus, which leaves the money available under federal law for creditors to garnish or levy the money from bank accounts to pay off pre-existing debts.
Fortunately, in Minnesota Governor Walz has issued Executive Order 21-02 which provides that except for child support and spousal maintenance debts, all federal COVID stimulus payments to individuals are deemed to be government assistance based on need and exempt from garnishment and levy by creditors (other than child support and spousal maintenance). What this means in plain English is that once deposited in a person’s bank account, the March, 2021 stimulus funds cannot be taken by creditors other than child support and spousal maintenance.
One potential gap in protection here is whether federal debts (such as back taxes and delinquent student loans owed to the federal government) can keep the stimulus payments to offset a federal debt, which would prevent the stimulus payments from ever being sent in the first place. This is something that will likely depend on the regulatory interpretation by the Department of the Treasury and Department of Education, and is not anything that we’ve heard any clarification on at this point. If we do find out more information, we’ll be sure to share it.
If you have any questions about your debts, please don’t hesitate to contact us!