The Impact of COVID-19 on Debt Collection - Debt Fighters

The Impact of COVID-19 on Debt Collection


April 22, 2020

COVID-19 and Debt Collection

Is There a Pause on My Payments?

Credit Card / Utilities

If you have been affected by COVID-19 directly and are confident that you will be able to pay your bills in full, you should reach out to your individual creditors to see what options you may have. Many credit card companies and lenders are waiving the minimum fees due during this time and some are suspending interest.

COVID-19 and Debt Collection

In the alternative, your credit card company can likely provide options in order to lower and/or defer your payments tailored to your financial circumstances. Additionally, many electric companies, such as Duke Energy, are no longer turning off the power to individuals who are not able to make their payments until the impacts of COVID-19 are lightened.

Contact your creditor right away to see what options you might have to avoid defaulting on your payments. If you are unable to avoid default, or are struggling to make your minimums after the health crisis passes, contact our Attorney Debt Fighters to see what options you might have to get your debt back on track.

Student Loans

COVID-19 and Debt Collection

If your student loans are federally serviced, the CARES Act, enacted on March 27, 2020 by the President, provides further protections regarding your loan payments. Under this Act, payments from March 13, 2020 through September 30, 2020 will be suspended with a 0% interest rate.

You are still able to make payments if you choose during this time. However, monthly payments are not required during this time and you will not be impacted for missing a payment.

Be sure to check your student loan account on or before September 30, 2020 to ensure that you do not miss your first payment due.

Can My Stimulus Check Be Garnished?

Many of us have been eagerly anticipating the arrival of the $1,200 stimulus check being provided as a little bit of relief to most Americans.

Treasury Offset

If you owe a federal or state government, such as for taxes or student loans, you may have experienced a federal offset of your tax return in the past. If you are familiar with this situation, you may be wondering whether your stimulus check is protected from a federal offset.

The short answer is, mostly. However, the CARES Act specifically allows for the Treasury Offset Program to seize stimulus checks for back-owed child support only. Student loans and other government debts are not to be offset by the stimulus relief money.

Other Debts

Unfortunately, if you owe money the institution where your stimulus payment is being deposited, there are no protections that prohibit the bank from taking all, or a portion of, the stimulus funds to satisfy that debt.

Additionally, if your creditor has obtained a judgment and the right to garnish your bank account, there is nothing that prohibits your creditor from garnishing the stimulus funds once deposited into the account.

If your stimulus check has been garnished, contact our Attorney Debt Fighters to see what options you might have to get those funds back.

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