Americans who need help paying rent or buying groceries amid the ongoing coronavirus crisis could see part or all of their U.S. government stimulus payments disappear as soon as the money hits their bank accounts.
Funds from the Coronavirus Aid, Relief, and Economic Security, or CARES, Act are being direct deposited across the country this week. But because most banks include a “set off” right in account agreements with customers, they can withdraw funds from accounts to satisfy unpaid debts.
That means individuals who have an overdrawn account or a delinquent loan could see that stimulus money, up to $1,200 depending on the individual’s 2019 income, used to satisfy those debts first if the funds are directly deposited into an account at the same institution where the debt is held.
“I would consider it a loophole in the [CARES Act] that could mean some people won’t be receiving the full amount that Congress wanted them to receive because they have outstanding debts with…