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Keeping Creditors From Your Stimulus Check

AP Photo/Matt Rourke

Stimulus money from the government is helping a lot of people stay afloat in a troubled economy.

But, in Virginia, it doesn’t have to help creditors.

That $1,400 stimulus check is burning a hole in your bank account, right? So what should you do with it? One thing you don't have to do with it is use it to pay off debt like your car loan or outstanding student debt. Last year, lawmakers passed a bill that says creditors can't go after your stimulus check.

But Jay Speer at the Virginia Poverty Law Center says he’s worried about people falling through the cracks.  "If the bank turns it over to the creditor mistakenly, the person could still get it back. But they'd have to go to court to get it back," Speer notes. "So you would have to know that it's exempt in order to realize that you can go to court and get it back."

He says he’s concerned that the new law doesn't have any consequences for banks that allow creditors to garnish stimulus cash.

Matt Bruning at the Virginia Bankers Association says the industry is taking steps to make sure stimulus money is identified and protected.   "It does give us a safe harbor for a good faith effort to comply," Bruning says.  "But if the bank doesn't do anything to try to figure out hey you've deposited $1,400 into your account. That's probably your stimulus check, and you don't protect it then you are liable."

Congress is considering legislation similar to the law Virginia passed last year.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Michael Pope is an author and journalist who lives in Old Town Alexandria.