Debt Collectors Would Be Barred From Taking COVID-19 Stimulus Money


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Consumer groups are applauding a bill that is meant to keep debt collectors from garnishing the stimulus payments and other direct aid approved by the federal government to offset the financial strain created by the pandemic.

The measure, given final approval this week in the state Legislature, will head to Gov. Andrew Cuomo’s desk for his final approval.

The bill, backed by Democrats Sen. Kevin Thomas and Assemblywoman Helene Weinstein, would cover federal legislation approved in 2020 and earlier this year from being taken in summary judgments, debt collection and other forms of seizure.

At issue for lawmakers in New York had been inconsistent language in federal law for protecting stimulus funds when sent to individuals.

“This bill will protect low-income New Yorkers and New Yorkers of color from predatory debt collection and ensure that federal relief funds actually provide relief, not windfalls for the debt collection industry,” said the New Economy Project, an advocacy group that backed the bill. “Now Governor Cuomo must swiftly sign the bill into law, to protect struggling New Yorkers from financial predation and ensure a just recovery.”

The bill comes about a month after Congress approved a $1.9 trillion relief package that sent another round of direct aid to U.S. residents in a bid to further boost the economy amid a pandemic-induced recession.