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Indiana Supreme Court rules debt collectors, creditors can't garnish stimulus checks

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Posted at 4:30 PM, Apr 20, 2020
and last updated 2020-04-20 16:30:16-04

INDIANAPOLIS — The Indiana Supreme Court ruled Monday that creditors can’t seize Hoosiers’ stimulus payments received through the federal CARES act, also known as stimulus checks.

The 4-1 decision is a victory for groups who have pushed to protect the funds from debt collectors seeking to garnish them.

"We’re thankful to Indiana Legal Services for taking the lead and responding quickly to concerns about seizure of stimulus funds. Because of this court decision, the federal intent of these funds will thankfully be honored at home," said Jessica Love, Executive Director of Prosperity Indiana.

Call 6 Investigates has received numerous inquiries from Hoosiers concerned their banks have already garnished their checks.

Congress intended these payments to help families meet their basic needs but the federal government did not ensure that these were protected from seizure by creditors and debt collectors.

“It is a relief that stimulus payments will be able to be used to meet urgent needs like housing, food, medicine, and utilities,” said Jessica Fraser, Director of Indiana Institute for Working Families. "We are grateful that the Indiana Supreme Court took this step. If Congress provides any future stimulus payments, it should ensure that these payments are clearly protected from bank account seizure by other creditors and debt collectors."

The Indiana Supreme Court ordered that lower courts may not issue new holds, attachments, or garnishments that cover funds in bank accounts attributable to CARES Act payments, except for child support, according to IIWF and Prosperity Indiana.

The Supreme Court also ordered that, when hold orders already have been issued, lower courts are supposed to treat requests by account holders as urgent.

This will allow the courts to determine whether any CARES Act payments are in the account, and those funds are protected from attachment or garnishment.

If you believe you’re in danger of having your stimulus checks garnished from their bank accounts can contact Indiana Legal Services or another legal aid provider for guidance.