Private debt collectors can access stimulus money from personal bank accounts, advocacy groups warn

CHICAGO (WGN) — Illinois Governor J.B. Pritzker said Tuesday he is working to protect residents’ stimulus checks from debt collectors as many people start to receive payments from the $2 trillion federal package.

Millions of Americans have started to receive direct deposits from the federal government, but advocacy groups warn that in some cases, private debt collectors can still access stimulus payments.

A Chicago man, who wished to remain anonymous, said he found this out the hard way when he saw his stimulus money disappear in a matter of hours.

“My balance came in on the card at midnight, it said $1,200, and then when I woke up around 4 a.m., I checked the balance and it said $625,” he said.

He said Pioneer Credit Recovery took $575 out of his account for payment on his student loan.

“When I called into Pioneer a week ago, she said the government was freezing all the debt accounts during the pandemic.”

But that’s not always the case.

The CARES Act does not prohibit private debt collectors from garnishing stimulus money from a personal bank account.
 
“It is difficult to find enough adjectives to describe this type of behavior: unconscionable, unethical, deplorable,” said Brent Adams, VP of policy and communications at the Woodstock Institute.
 
Adams said the Chicago-based institute has been working to prevent debt collectors from siphoning much-needed money from American families.
 
“It can mean the difference between getting a prescription or not and feeding your family or not, that’s why it’s so important,” said Adams.

But it’s not too late to take precautions.
 
“Contact your creditors — even if the payment has already been made. Ask, ‘A.) can you reverse the payment? B.) Can I revoke my authorization for the next series of payments indefinitely because we don’t know when this will stop,’” said Adams.

Illinois Attorney General Kwame Raoul is part of a coalition urging the federal government to take action to ensure stimulus money goes to American families, not debt collectors.