THE $1400 STIMULUS CHECKS ARE PROTECTED IN BANKRUPTCY
$1400 stimulus check are starting to arrive in peoples’ bank accounts, but is it protected in Bankruptcy?
YES, The March 2021 checks are protected in bankruptcy. There is a special piece of the law that gave the $600 checks to everyone that also protects the $1400. This code section is 11 U.S.C. § 541(b)(11). The December bill says:
SEC. 1001. BANKRUPTCY RELIEF. (a) Property of the Estate.– (1) In general.–Section 541(b) of title 11, United States Code, is amended– (A) in paragraph (9), in the matter following subparagraph (B), by striking “or”; (B) in paragraph (10)(C), by striking the period at the end and inserting “; or”; and (C) by inserting after paragraph (10) the following: “(11) recovery rebates made under section 6428 of the Internal Revenue Code of 1986.”. (2) Sunset.–Effective on the date that is 1 year after the date of enactment of this Act.
The new $1400 stimulus check is therefore protected once the bankruptcy is filed. This is a federal law that should apply to people filing bankruptcy in any state in the US. The government has been good at recognizing that people need these stimulus payments for groceries and other important things. In fact, people in bankruptcy need the stimulus payments more than people who are not in bankruptcy.
CAN A DEBT COLLECTOR TAKE THE $1400 STIMULUS PAYMENT OUTSIDE OF BANKRUPTCY?
In Minnesota, if a creditor has a judgment from May, 2020 or earlier, they can take the stimulus check from your bank account by using a bank levy. A bank levy lets a judgment creditor take certain types of money out of a bank account and apply it to the debt. Bank levies or garnishments can’t be used to take some government benefits like Social Security, but it will happen to stimulus payments.
To prevent this from happening, it is a good idea to take the money out of your account quickly after it arrives. Lots of people are also filing bankruptcy to avoid problems with this. Bankruptcy makes judgments go away permanently so that they can’t be used to freeze bank accounts.
BANKRUPTCY MAY ALSO ALLOW YOU TO GET THE $1400 STIMULUS BACK FROM A JUDGMENT
If your stimulus payment gets frozen by a bank levy in Minnesota, then act quickly! If we file your case within 90 days of when the money got taken in the first place, then we can likely recover it for you. Filing a bankruptcy takes more time than typing your Social Security number into a website, so it’s best to call immediately if it happens.
We have a free conference with an attorney and can file your case for only the filing fees up front. No attorney’s fees down at all. The filing fees are $353. Call now at 612-824-4357 if you have questions.