New law blocks recovery fund collectors

A new state law approved Thursday by Gov. Andrew Cuomo will bar debt collectors from accessing stimulus funds in bank accounts, a move that has been sought by consumer groups.

The law would cover the federal stimulus approved in 2020 and earlier this year, prohibiting debt collectors from taking that money in summary judgments, debt collection and other forms of asset foreclosure.

“New Yorkers across the state have been feeling the effects of the COVID pandemic, with many losing their jobs through no fault of their own and struggling to support themselves and their families,” Cuomo said. “This vital legislation will help ensure that relief payments to New Yorkers are protected from unscrupulous debt collectors so that the money can be used as intended – to help reassure individuals and families as they go.” continue to recover from the economic effects of the pandemic. . “

The problem for lawmakers who lobbied for the bill in New York was inconsistent language in federal law to protect stimulus funds when they were sent to individuals.

“Federal allowances were designed as a lifeline to help families and individuals struggling to make ends meet during these exceptionally difficult times,” said Senator Kevin Thomas, Democrat who sponsored the bill and running for comptrollership of New York City this year. .

The new law also includes an opt-out provision to ensure that funds raised would pay child and spousal support, as well as to collect payments in the event of fraud.

Congress approved thousands of dollars in direct payments to Americans last year amid the economic shutdown due to the COVID-19 pandemic, as millions of jobs were cut by businesses and tax revenues have dried up for local and state governments. Subsequent stimulus measures sent more money to Americans in an attempt to jumpstart an economic recovery.

“Federal relief payments were intended to help families struggling to make ends meet during this unprecedented time,” said MP Helene Weinstein, the bill’s sponsor in the assembly. “This legislation ensures that families are able to use this safety net funding as originally intended, to meet the basic needs of families and away from the hands of debt collectors.”

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