Justices decline to shield COVID-19 stimulus checks from creditors

The Indiana Supreme Court has denied a petition from several legal aid providers and social service organizations asking the justices to protect the latest round of stimulus checks from being scooped up by debt collectors.

Without explanation as to its reasoning, the court issued a 143-word order Friday that said each justice had the opportunity to voice his or her views and each voted on the petition. The court unanimously stated it was denying the “Petition to Extend Protections Against Garnishment to Stimulus Payments under the American Rescue Plan Act of 2021.”

In April 2020, the court issued an order shielding the first round of stimulus checks that were part of the CARES Act. Legal aid agencies at that time asked for the funds to be protected from creditors because Hoosiers needed the money to pay for essentials like food and rent.

According to John Brengle, director of the Consumer Law Center at Indiana Legal Services, households are continuing to struggle under the pandemic-induced economic downturn.

Brengle told the Indiana Lawyer when the legal aid organizations filed the petition for the extension of protection that “People are still in dire need.”

The protection did not cancel the debt. But now, without the protection, the checks can be seized by creditors to cover past due payments for things like credit cards, cars and medical services.

Along with Indiana Legal Services, Indianapolis Legal Aid Society, Neighborhood Christian Legal Clinic and Pro Bono Indiana, Inc., were the legal aid providers who joined on the petition to extend the protection.

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