Banks are taking stimulus checks to cover overdrawn accounts

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4. Its not just money you owe your bank, it's also money owed to private 3rd party debt

The federal government won’t garnish for back taxes or student loans

If you owe taxes, don’t worry. The IRS will not take any of the stimulus money for back taxes. If anyone approaches you claiming to be from the IRS saying that your stimulus payment will need to go to the taxes you owe — that’s a scam. The government is also not permitted to take your stimulus money for defaulted student loans. If you happen to owe child support, though, your check will be reduced to cover your late child support payments.

But experts warn banks could take your stimulus money

Unfortunately, the above applies only to federal and state debt. Experts have warned that banks may be able to garnish your stimulus payment for private debt collection, with a top U.S. Treasury official reportedly telling banks that “there’s nothing in the law that precludes that.”

If you have outstanding loans or owe bank fees, your bank could automatically take the money to offset those debts. Because the stimulus payments are categorized as refundable tax credits and not federal benefits, they can be garnished for debt. Congress made an exemption on garnishment for federal and state debt when it passed the CARES Act, and it also gave the Treasury the authority to write additional exemptions for private debt. Senators Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, and Ron Wyden of Oregon wrote a letter to Treasury Secretary Mnuchin on April 3rd informing him that private debt collectors can garnish stimulus money. So far, the department has made no move to write an exemption protecting the checks

More: https://finance.yahoo.com/news/pay-back-stimulus-check-money-182637807.html