Press Release  AG Healey Reminds Debt Collectors That Stimulus Checks Are Exempt From Seizure or Garnishment

Boston — Attorney General Maura Healey today issued guidance to protect consumers who will receive an economic impact payment as a result of the federal government’s American Rescue Plan from unfair and deceptive debt collection practices. The guidance makes clear these payments must go directly to help families and individuals, and not to debt collectors.

Under President Biden’s American Rescue Plan Act of 2021, qualifying residents will receive economic impact payments of up to $1,400 per person and $1,400 for each of their qualifying dependents claimed on their tax return. According to the guidance, the AG’s Office has determined that these are exempt from seizure or garnishment under Massachusetts law. Any attempt to garnish, attach or otherwise seize these funds to collect or attempt to collect a debt violates the Attorney General’s Debt Collection Regulations.

“These stimulus payments must go directly to help struggling people and families pay for housing, food, utilities and other basic needs, and not into the hands of debt collectors,” AG Healey said. “We are issuing this guidance to put the debt collection industry on notice and to make sure consumers are aware of their rights under the law.”

“Greater Boston Legal Services is very pleased that Attorney General Healey is making it clear that debt collectors cannot garnish the $1,400 Economic Impact Payments that Massachusetts residents receive,” said Nadine Cohen, Managing Attorney of the Consumer Rights Unit at Greater Boston Legal Services. “To allow debt collectors to garnish this money that people so desperately need to buy food and pay their rent would be a true travesty of justice. Thank you to the Attorney General for taking swift action to protect this money so that low-income people can get the help they need in these difficult times.”

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021. Section 9601 of the plan provides cash assistance to individuals and families subject to means-tested eligibility criteria. Specifically, the plan provides for a one-time cash payment in the form of a refundable tax credit, identified as “2021 recovery rebates for individuals,” of up to $1,400 for each eligible individual or $2,800 in the case of eligible individuals filing a joint return, plus an additional $1,400 per dependent child. Individuals with higher incomes will receive a lesser payment or no payment whatsoever.

Massachusetts law exempts certain income and property from attachment or seizure by persons attempting to collect a debt. The purpose of the exemption law is to ensure individuals have enough income and property to provide for basic necessities like housing, food, and utilities.

According to the AG’s guidance, any attempt or threat to garnish or seize funds provided through the American Rescue Plan Act in an attempt to collect a debt violates the AG’s Debt Collection Regulations and the Massachusetts Consumer Protection Act. The AG’s guidance, however, does not apply to any actions taken by the Massachusetts Department of Revenue, including any actions taken to collect past due child support.

The AG’s Office previously issued similar guidance in April 2020 about payments under the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Visit the AG’s website for more information about the AG’s Debt Collection Regulations. The AG’s Consumer Protection Division encourages members of the public to call 617-727-8400 or file a complaint online if you witness or experience aggressive debt collection or predatory lending during this public health emergency.

The AG Healey’s COVID-19 resources page has more information about how the office can assist the public during this crisis.

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