Legislation would prevent debt collectors from seizing stimulus checks from vulnerable families

Photo courtesy of New York State Senate Media Services
Sen. Kevin Thomas, sponsor of a bill exempting COVID-19 stimulus relief for individuals and families with children from money judgments, speaks in the Senate Chamber on March 3, 2021.

The Senate recently passed legislation (S.5923-a) sponsored by Senator Kevin Thomas, that would prevent the revocation of federal COVID-19 stimulus checks for individuals and families with children to satisfy money judgments. 

Assemblywoman Helene Weinstein sponsors the Assembly version of this bill, A.06617  which passed the Assembly on April 19. Currently, specific funding such as Social Security, Social Security disability, public assistance and more are considered exempt from money judgments.

The Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act of 2020, Consolidated Appropriations Act 2021, and American Rescue Plan Act of 2021 provided financial assistance to families with children to help cushion the unprecedented time of the pandemic, which has disproportionately affected communities of color.

“Federal relief payments were intended as a lifeline to help families that are struggling to make ends meet during these exceptionally challenging times,” Thomas said. “Allowing these funds to be seized by debt collectors deprives families of the ability to provide for their children and cover immediate bills like rent, food, and utilities. This legislation ensures families are able to use this safety-net funding as it was originally intended.”

The federal legislation that authorized and created the stimulus packages did not include language that was consistent with protecting the third stimulus payments. The COVID-19 stimulus relief packages would now be protected, if the governor signs this bill, and they could not be seized by debt collectors.

According to the Community Service Society of New York, citywide unemployment rates were at 21.1 percent among Asian residents, 23.7 percent among Black residents and 22.7 percent among Latinx residents, compared to just 13.9 percent among white New Yorkers, in June 2020.

Additionally, the Community Service Society’s 2019 Unheard Third survey, reports that “a third of Black New Yorkers and 45 percent of Latinx New Yorkers said that they worried all or most of the time about having enough income to pay their bills, in contrast to just 17 percent of white New Yorkers who felt this way.”