The $1.4k relief checks have been credited to bank accounts, but the American Bankers Association warns the funds aren’t protected from private debt collectors. Court-approved bank account garnishments attached to deposit accounts could automatically apply the stimulus money as payments for long outstanding credit card debts and unpaid hospital bills.
Although Democratic Senators.Ron Wyden (Ore) and Sherrod Brown (Ohio) have introduced a bill to protect the stimulus money against private debt collectors, Republican senators are poised to block said bill. GOP Senator Pat Toomey (Pa) said the debt collectors are only pursuing “valid legal claims” from people who owe them money. Where a notice of garnishment has been issued by the court adjudication, it then serves as the lenders’ tool in collecting payment of a long overdue debt.
Understanding How Bank Account Garnishments Work
A bank account garnishment is usually a last resort used by lenders to collect money from individuals who have repeatedly ignored requests to pay their financial obligations, While this is a legal means of collecting a debt, lenders do not immediately file a lawsuit petitioning for a bank account garnishment, since it’s a costly legal step. A lawsuit is filed only after a lender has exhausted all methods of collection by way of written notices, phone calls and through collectors.
Presumably, the existing notices of garnishment attached to the bank accounts were obtained prior to the outbreak of the pandemic, since a debt collection moratorium was imposed by state governments since 2020, to protect citizens against debt collectors.
Financial Studies Prior to the Global Health Crisis Showed that Majority of Americans are Financially Stressed
Based on a 2018 study by FINRA, more than half (53%) of American adults were already financially stressed even before the occurrence of the global health crisis. One of the reasons is their lack of financial literacy in handling personal finances, especially when it comes to availing credit and financing offers.
The Importance of Financial Literacy Among Consumers
The FINRA study should have drawn the government’s attention to the general lack of financial literacy among Americans, considering that many are living from paycheck to paycheck.
In Australia, the Australian Securities and Investments Commission (ASIC), with the support of regulators of consumer markets, consumer credit and financial services, established a website known as Moneysmart. The purpose of which is to provide information on how Australian citizens can make informed decisions, especially when availing financing offers. .
The initiative came about after a study revealed that one out of three Australian adults encounter difficulties in handling their finances due to bad financial decisions. As an example, not a few Australians purchase vehicles by simply accepting the car financing deals of the car dealer, unaware that the terms and conditions covering the car loan could overwhelm their personal finances.
Nonetheless, most Australians are savvy enough to research about other options by making comparisons not only of interest rates; but also of other terms and conditions that could impact their actual financial conditions. Moreover, while there are brokers of car financing facilities, a study of automotive consumers in Australia shows that 60% prefer those that offer free brokerage services
National loans Australia is a leading car broker in the country as the people working behind the financial servicing focus on tailor fitting car loans according to the financial capability of the purchaser. In having 24 years of building relationships with banks, financing institutions and car dealers, the brokers at National Loans use their expertise in helping Australians stick to their budget. That way, the purchaser of a new car or any type of vehicle can use borrowed money with confidence.Read More