Indiana Supreme Court again asked to protect stimulus checks

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A collection of Indiana agencies, including several legal aid providers, are asking the Indiana Supreme Court to help low-income Hoosiers by again blocking creditors from taking their new round stimulus payments that are being issued as part of the American Rescue Plan Act of 2021.

Indiana Legal Services, Prosperity Indiana, Indiana Institute for Working Families, Indianapolis Legal Aid Society, Neighborhood Christian Legal Clinic and Pro Bono Indiana, Inc., have filed a petition with the state’s highest court seeking an extension of last year’s order that protected the stimulus checks dispensed under the CARES Act.

The petition, filed Monday, only requests the court extend the April 20, 2020 order. It does not ask for any additional protections nor does it seek to cancel any debt.

John Brengle, director of the Consumer Law Center at Indiana Legal Services, said the protection is needed because many families are continuing to struggle under of the economic downturn caused by the COVID-19 pandemic. Individuals are either still laid off from their jobs or just going back to work and they need the stimulus money to cover essentials like car payments, utilities, rent, mortgage, and doctor visits.

“People are still in dire need,” Brengle said.

The petition noted the Rescue Act prohibits the Internal Revenue Services from issuing levies against the stimulus payments for past-due taxes. However, the Act does not prevent private creditors like landlords, credit card companies, hospitals and debt collectors from garnishing or seizing the money.

By blocking access to the $1,400 checks, households will be able to use the money to pay for their immediate needs, the petition stated. This, in turn, will stimulate the economy and help the country recover from the pandemic.

Brengle said last year’s order appears to have helped Hoosiers keep their CARES money.

After the Supreme Court issued the order, ILS sent notifications to its offices across the state, alerting the attorneys and staff the $1,200 stimulus checks could not be garnished by creditors. The legal aid provider only received a handful of calls from individuals but those inquiries were about funds being seized for child support which the order allowed.

The petitioners did notify a handful of attorneys who represent creditors of the request for the extension of the stimulus protection. Last year, creditors and their law firms argued the relief requested was too broad.

In addition to seeking an extension of the protection, the service agencies are asking the court to reconsider the July 1, 2021 expiration date. The justices included an expiration date as part of its Order on Continued emergency Actions, Case 20S-CV-123, issued Nov. 10, 2020. After that time, the stimulus funds would be open to attachment and garnishments.

The agencies highlight to the court that the Rescue Act payments are only now beginning to be sent. As the petition stated, extending the expiration date would “provide sufficient time to protect Hoosier households from collection actions against their stimulus payments.”

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