As the federal government gets ready to start sending stimulus payments to millions of Americans in mid-April of 2020, this office has become aware of a mini-movement among a group of bankruptcy attorneys looking to frighten debtors (i.e. their potential clients) into worrying about the payments being scooped up by debt collectors seeking so-called “garnishments.”
Specifically, the group is encouraging other lawyers to circulate a Forbes magazine article to prospective clients entitled “Stimulus Checks Are Coming Next Week. Could Private Debt Collectors Grab Them?” authored by Sarah Hansen.
For most debtors in Massachusetts and New Hampshire, the answer to Hansen’s question is “probably not.” First, as the article itself mentions, Massachusetts has enacted a temporary regulation during the virus crisis that prevents such a stimulus grab. And even in states like New Hampshire, which hasn’t yet put specific restrictions in place, such a move seems unlikely.
First, while courts are technically open for business, courthouses in New Hampshire are physically closed, and what business is being conducted is being done by telephone, Zoom, and similar technology-based connections. This forces a sort of legal triage, where local courts concentrate on new criminal cases and domestic violence situations, and “garnishments” in small claims cases go straight to the back burner.
Second, private debt collectors can’t just “serve a garnishment order” on a debtor at their own whim; in both Massachusetts and New Hampshire, these orders need to be approved by a judge first. The process (which is really an attachment of a bank account balance, and not a garnishment or interception of the government payment itself) is antiquated and cumbersome in the best of times, which is why we don’t see nearly as many attachments around here as many do in other sections of the country.
Bottom line: if you get a $1,200.00 stimulus payment and realize most of it is going to go to pay credit card interest, etc., it may certainly worth your while to explore whether using the money to get a bankruptcy lawyer is a good idea. But there’s no need to do it out of fear that the payment will be seized.