Home > Personal Finance > Can Debt Collectors Take Your COVID-19 Stimulus Check?

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The federal government passed the CARES Act in March 2020 in response to the economic need created by the COVID-19 coronavirus pandemic. And while the act prohibits stimulus money from being taken to settle certain obligations, not all debts are protected. Find out more below.

About the 2020 Stimulus Checks

As part of the CARES Act, the federal government sent stimulus checks to individuals who qualify for a COVID-19 emergency payment. People who make under a certain annual income—according to their 2019 or 2018 tax returns—received or will receive the payments.

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    The stimulus payments, which can be as much as $1,200 per qualifying adult and $500 per qualifying dependent, are meant to help Americans cover necessary expenses during this time. They’re also designed to inject some cash into the economy. But if you receive a stimulus check, you can typically do a number of things with it at your discretion.

    Creditors and Your Stimulus Check

    While paying down debt might be something people will do voluntarily with their stimulus funds, you probably don’t want to see your check taken by a creditor. The CARES Act actually protects your stimulus funds from certain types of collections—but not all.

    Tax Debt

    Your stimulus check cannot be seized to cover tax-related debt. If you owe taxes, the IRS will not send your stimulus check to accounts used to make payments to the IRS. If the IRS does not have another account on file, it will mail you your check.

    The payment will not be included in your gross income for 2020, so it won’t affect your tax refund next year either.

    Federal Student Loan Debt

    Federal student loan debt won’t affect your stimulus check either. All payments on federal student loans are suspended with no interest until September 30. Keep in mind that private student loans are not covered by these accommodations.


    For the most part, stimulus payments will not be included as part of a bankruptcy settlement. This money is not considered income, so it won’t be included in calculating your monthly income or disposable income to be paid to your creditors as part of a bankruptcy.

    Child Support

    Your stimulus check can be seized if you are behind on child support. There are no exemptions for financial hardship.

    Bank Debts

    If your stimulus check is deposited into a banking account at an institution that you owe money, the bank can keep funds to offset what you owe. For example, if you have overdrawn a checking account in the amount of $300 and your $1,200 stimulus check is deposited into that account, you might only receive $800 of the money. Many banks have instituted their own policies around coronavirus, so check with your banking institution before depositing money into an account with them.

    Debt Collections

    Debt collectors might also be able to seize your stimulus check. They can’t do so directly—creditors aren’t going to contact the IRS and have your money diverted to pay off what you owe. But they can garnish your bank account if they have a judgment against you or seek a judgment to do so.

    If creditors take this action and are able to successfully garnish your bank account, any stimulus funds deposited into that account could be seized. The CARES Act does not have any specific provisions protecting those funds from private debt collections.

    How Do You Know If You Have Debts in Collection?

    Not sure if your stimulus funds could be in danger from creditors? Understanding the collections process can help. You can also pull your free credit report at AnnualCreditReport.com. Through April 2021, you can get a free credit report once a week to help you manage personal finances as proactively as possible during the fallout from coronavirus.

    Tips for Protecting Your Stimulus Funds

    These economic impact payments are meant to help with living expenses during a turbulent time for the country. If you know you have an account in collections and are worried about your stimulus funds being taken for those rather than your immediate needs, you can take a few proactive steps to help protect the incoming money. A little research and planning can go a long way.

    Research Laws in Your State

    Some states passed their own laws to protect stimulus funds from private debt collections. Make sure you know what measures your state put in place. Even if you have an account in collections, you might not have to worry about your stimulus funds being forfeited to the collector if state law forbids it.

    Contact Your Creditor to Make Arrangements

    If you agree that you owe the money and you can afford to make some type of arrangement, contact your creditor to work out a deal. Make sure you get any agreement in writing so you have proof that the creditor agreed not to move forward with further legal actions or garnishments in exchange for agreed-upon payments from you.

    COVID-19 Financial Resources

    There are many financial resources available during COVID-19 for individuals. Make sure to do your research and understand what options are available to you. That can help you make the most of any money you do receive while also protecting yourself against debt collectors. For more information, check out Credit.com’s COVID-19 financial resources guide.

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