New Law Blocks Debt Collectors From Stimulus Funds


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A new state law approved Thursday by Gov. Andrew Cuomo will bar debt collectors from accessing stimulus funds in bank accounts, a measure that had been sought by consumer groups.

The law would cover the federal stimulus approved in 2020 and earlier this year, barring debt collectors from taking that money in summary judgments, debt collection and other forms of asset seizure.

“New Yorkers in every corner of the State felt the effects of the COVID pandemic, many losing jobs due to no fault of their own and struggling to support themselves and their families,” Cuomo said. “This critical legislation will help ensure relief payments made to New Yorkers are protected from unscrupulous debt collectors so that the money can be used as it was intended – to help make individuals and families whole as they continue to recover from the economic impacts of the pandemic.”

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

“Federal relief payments were intended as a lifeline to help families and individuals that are struggling to make ends meet during these exceptionally challenging times,” said Sen. Kevin Thomas, a Democrat who sponsored the bill and a candidate for New York City comptroller this year.

The new law also includes a carve-out provision to ensure funds being collected would pay for child and spousal support, as well as to collect payments when fraud is involved.

Congress last year approved thousands of dollars in direct payments to Americans amid the economic shutdown due to the COVID-19 pandemic as millions of jobs were shed by businesses and tax revenue dried up for local and state governments. Subsequent stimulus measures sent more money to Americans in a bid to jumpstart an economic recovery.

“Federal relief payments were intended to help families that are struggling to make ends meet during this unprecedented time,” said Assemblywoman Helene Weinstein, the bill’s Assembly sponsor. “This legislation ensures families are able to use this safety-net funding as it was originally intended, to provide for families basic needs and away from the hands of debt collectors.”