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Debt collectors could be coming for your stimulus check

Money $100 bills
Posted at 7:06 AM, Mar 18, 2021
and last updated 2021-03-18 08:07:44-04

WEST PALM BEACH, Fla. — Many Americans have started to see the latest round of stimulus checks flow into their bank account after President Joe Biden signed into law the $1.9 trillion American Rescue Plan last week.

However, one group may be left out of receiving the free cash.

Debt collectors are apparently ready to snap up the checks of those who owe them.

Dee Hemsley of Delray Beach, Florida said she has been locked out of her Wells Fargo bank account, which is now empty of the unemployment benefits she had been collecting.

Dee Hemsley, Delray Beach resident whose bank account frozen before getting 3rd stimulus check
Dee Hemsley says she has been locked out of her Wells Fargo bank account and blames a debt collector.

"Since Thursday, I'm left with no money," Hemsley said.

She said it's the work of a debt collector, who may have been anticipating the $1,400 in federal help that she is due to receive.

"The debt collectors are freezing accounts because they want to take the stimulus money," Hemsley said.

Financial experts say it is possible.

Congress passed the American Rescue Plan under budget reconciliation, leaving the payments open to private debt collectors for things like credit card, medical or student loan debts.

"We were not able to protect that because of the technicalities on how we passed the bill," Rep. Lois Frankel, D-Florida, said.

U.S. Rep. Lois Frankel
U.S. Rep. Lois Frankel advises calling the agency you may owe a debt to and see if you can delay payments.

With no protection, people like Hemsley are now subject to losing the $1,400 as soon as it hits their frozen accounts.

"There's a lot of other ways people can get help other than these checks, but I would suggest is if somebody is in a collection situation they call the company they owe money to and explain the situation, and see if they can hold it off," Frankel said.

“What happens is they will freeze and seize the bank accounts of the people that have the direct deposit for sure,” said Paul Oster, a certified FICO credit expert.

Oster says the only way a debt collector can do that is under a judge's order, which Oster says is pretty easy for debt collectors to manage.

“If there’s been a judgment that’s filed against you you have to deal with that head-on. That’s a court order,” he said.

But many people don’t find out they’ve been served until their account is already frozen, Oster says. That’s when he suggests getting a lawyer.

He adds that anyone expecting their stimulus check in the mail should sign it over to someone they trust so they can cash it for you.

Hemsley said the collection agency hung up on her without receiving any information on what the debt is or how much is owed.

Since she is still without a job, Hemsley said losing the stimulus money will hurt.

"I have a credit card that I'm using, and I have a food assistance card that I use for food. That's about it," Hemsley said.

This story was originally published by Matt Sczesny and Heather Leigh on WPTV in Palm Beach, Florida and WFTS in Tampa, Florida.