In a bid to cater for the surging needs of the American populace amid the coronavirus pandemic, the Internal Revenue Service has disbursed the first round of emergency cash for 50 million Americans to be distributed through direct deposit. The CARES Act approves payments of $1200 per eligible adult and $2400 for joint tax returns. However, the Act does did not place limits on banks’ utilization of the relief funds to offset private debts. So while the money may get into the bank account of the 50 million Americans, banks may decide to divert a customer’s government relief fund to offset private debts. Implying that the customers may not be able to readily utilize the funds yet.
Following reports from The American Prospect, debt collectors at several leading banks, such as the Bank of America, U.S. Bank, and Citibank may be considering utilizing the government relief fund from customers’ accounts. Congress is said to not have excluded CARES Act payments from private debt collection and the Treasury Department seems to be reluctant to exempting them through its laws.