PHOENIX — With unemployment at a record high and a question mark hanging over when the economy might get back to work, many Americans are depending on stimulus checks from the government to make ends meet.
The IRS started sending money to bank accounts this week, but some of the Americans who need the money most could end up not seeing a dime.
"You could have a situation where if you’re overdrawn on your bank account and there is a direct deposit, the bank could offset it and take at least a portion or all of it, according to how overdrawn you are," said attorney Michael Ferrin. "Now, we are all hopeful that banks won’t do that in this situation, but that will be a policy that will be a decision the banks make...so that’s a possibility."
The stimulus payments are defined as tax credits instead of federal benefits, which means people who owed creditors before the coronavirus pandemic could end up paying those debts with the stimulus money.
"Unfortunately, the legislation exempted federal and state governments from taking that money if you owe them money, but it doesn’t protect the stimulus check from private creditors," explained Ferrin. "If there is a judgment against you, just like any other money that’s in your bank account, a judgment creditor could sweep the account and take the funds, including the stimulus package funds from that account."
Ferrin said if you think it is a possibility for your account to be swept, you should withdraw the stimulus money as soon as possible so you have the cash to buy food and other necessities now and you can deal with creditors later.
"We are temporarily crediting the overdrawn amount for customers, giving them full access to their stimulus payment. We hope this gives them a chance to catch their breath,” said Maura Cordova from JP Morgan Chase bank.
Wells Fargo is pausing collections for now. “To do our part to provide our customers access to the stimulus payment funds, Wells Fargo is pausing for 30 days the collection of negative balances existing at the time when stimulus payments are deposited," said spokeswoman Liana Enriquez.
"Many customers will automatically receive stimulus payments in their accounts. We encourage customers who receive a stimulus payment check to use mobile deposits or ATMs to deposit the checks if possible. We will also cash stimulus payment checks for non-customers in our branches, with no fees charged,” added Enriquez.
Bank of America said if an account is negative or bank fees are owed due, the bank is deferring those fees to ensure customers receive their full stimulus payments.
Comerica Bank said it will bring negative accounts current before making the money available to customers.
We are waiting on policy updates from other banks in the Valley.
All the bankers wanted to encourage anyone with questions or concerns about debts owed to call your bank.
If you have other questions about the stimulus money, you can find what you need to know by clicking here.
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