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Indiana Supreme Court rejects request to stop creditors from seizing 2021 COVID relief payments

INDIANAPOLIS (WISH) — Creditors could seize your latest stimulus payment, the Indiana Supreme Court decided Monday morning.

The Indiana justices unanimously denied an emergency petition filed by Indiana Legal Services and five other nonprofit law firms asking the state’s highest court to extend the protection against garnishment to stimulus payments under the American Rescue Plan of 2021.

The court had blocked collection attempts in the past; Jon Laramore of Indiana Legal Services filed a petition in April asking the Indiana Supreme Court for emergency rules to protect Coronavirus Aid, Relief, and Economic Security (CARES) Act money distributed in 2020 from garnishment.

“There needs to be some vigilance if we want to protect this money so that it can be used for the purpose Congress intended it, that it not be pulled out of banks with no notice or little notice and applied for other purposes,” Laramore told News 8 in April.

Monday’s ruling was a different story.

The Monday ruling said, in part, “The Court has reviewed the pending petition. Each Justice has had the opportunity to voice that Justice’s views on this matter in conference with the other Justices, and each has voted on the petition. Being duly advised, the Court DENIES the Petition to Extend Protections Against garnishment.”

The justices did not explain their decision.

The previous two rounds of stimulus payments had barred private debt collectors from seizing the payments to cover such debts as unpaid credit card or medical bills. Legislation is being considered in Washington to fix the garnishment issue in the 2021 stimulus payments.

Also, the latest stimulus relief payments are not protected from state and federal tax debts.  

U.S. Rep. André Carson, a Democrat from Indianapolis, said he was “disappointed” by the ruling from the Indiana justices. 

Statement

“I am very disappointed by the Indiana Supreme Court’s ruling. These stimulus checks are survival payments. They are meant to help Hoosiers pay for necessities like food, rent, and medical care, which is why Congress approved these funds.”

U.S. Rep. André Carson, a Democrat from Indianapolis

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