Californians have started to see money appear in their respective bank accounts. Specifically, single people received $1,200, and each child received $500. However, for California citizens who have consumer debt, the money sent them can simply vanish fast.

As part of the national COVID-19 response package, also called the CARES Act amounting to $2.2 trillion, the payments forbid the state governments and the federal from intercepting them, except if there is a need to collect for "child support debt.

However, the bill is remarkably mum on banks and private debt collectors, leaving citizens defenseless against garnishments. In relation to this, consumer advocates claim this is defeating the purpose of cash relief intended to help those who are the most financially insecure, stay afloat.

And, as the other states have stepped in to ensure the protection of the stimulus checks against debt collectors, California has unfortunately not. According to Ted Mermin, this is not the main reason why the payments are being issued to pay for the old debt.

Call to Halt Debt Collection and Debt Collection Lawsuits Immediately

Mermin, the leader of California Low-Income Consumer Coalition added, the stimulus checks are issued "to put food on the table." Also, consumer advocates want Gov. Gavin Newsom to put an instant termination to most debt-collection lawsuits.

Relatively, an executive order, the advocates said, would shield the stimulus checks and preserve the millions of Californians' economic lives. Debt collectors for their part, commit, "They won't stand in the way."

The California Association of Collectors Cindy Yaklin explains, her group is only against a suspension on all collection efforts, which she said would impede the sector. The office of the governor, on the other hand, has not responded yet to multiple questions if the creditors should be permitted to take the stimulus checks.

Instead, Gov. Newsom's office directs the queries to an EO signed on Thursday, which allows checks for any individual late on payments for child support, "to be sent to the custodial parent first" before the administration can have the money applied to old debt related to child support.

Despite Gov. Newsom's seemingly quietness on the issue in general, other elected officials have pushed for action. Specifically, attorneys general in 25states, which include California, as well as 14 US senators which Sen. Kamala Harris leads, sent letters advising the US Treasury to allocate the relief payments as relieved from garnishment.

Who are Potentially at Risk?

Remarkably, hundreds of thousands of Californians are said to be potentially at risk. According to the Urban Institute analysis, about one in every four California citizens, "Have some debt in collections."

The same institute also indicates that banks go first in line when it comes to taking the stimulus checks from people who have negative balances on their account, although most major banks have sworn not to.

Next in line, as the analysis shows, are the private debt collectors who have won a lawsuit on debt collection. With the court judgment, these collectors are permitted to ask the county sheriff's department to order a particular bank to freeze the non-exempt funds in a bank account of a person.

Aware that stimulus checks have begun arriving, according to Consumer Justice Practice at the East Bay Community Law Center director, Sharon Djemal, debt collectors may choose to levy bank accounts in the next couple of weeks.

The State's Role

As mentioned, several states have already stepped in to protect the stimulus checks against debt collections and related lawsuits. Therefore, according to Mermin, the Judicial Council of California can also exercise its emergency powers to prohibit the garnishing practice.

Moreover, Gov. Newsom can also follow the lead of governors, specifically in Washington and Illinois. They have delayed the state laws, which allow sheriffs to issue bank garnishment and wave levy.

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