New York is blocking banks and debt collectors from seizing stimulus payments delivered to residents authorized by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
Payments started going out to Americans last week, either through the mail or electronic direct deposit.
On Saturday, New York's attorney general said banks and debt collectors cannot freeze or seize stimulus funds. The stimulus payments approved by Congress and President Trump "were not designated as exempt from garnishment, allowing debt collectors to potentially benefit from consumers," AG Letitia James warns.
James argues state law exempts public benefits from legal processes "by a judgment creditor seeking to satisfy a monetary judgment."
"I took action to ensure NYS banks, creditors & debt collectors can NOT garnish CARES Act stimulus payments & raid critical financial relief from New Yorkers during this crisis. Any institution that violates this order will face swift legal action from my office," tweeted New York Attorney General Letitia James.
More than 80 million Americans are expected to receive payments via direct deposit into their bank accounts, according to the Treasury Department.
Mailed paper checks will start going out April 20 for Americans who do not have their direct deposit information on file. About 5 million checks are expected to be mailed per week. It could take up to 20 weeks — five months — for all of the checks to be sent.
