One of the few solid pieces of action from the federal government regarding the COVID-19 outbreak is the coming relief checks that should start dropping soon. Taxpayers who have allowed direct deposit in the past should begin seeing checks of at least $1,200 appear, to help cover costs while the economy is effectively at a standstill. It's a good idea that many hope will go farther, but unfortunately, some banks might take their share first.
The American Prospect has broken a story this week about how federal regulators are handling the coronavirus stimulus relief and individual consumer debt. The very short version is that if you've got debt in private collection, banks are allowed to use your disbursement to pay down your debt before you get anything. The bill which authorized the payments explicitly says these funds are exempt from debt collection to state and federal agencies, unless they're involved with child support. In private debt matters, however, because the checks are classified as a tax credit (as opposed to a federal benefit, like disability or Social Security), the collection agency can garnish them.
It's not a given that your bank will step in to pay down your overdraft fees or delinquent loans, and certain cities and states have already announced that such measures won't be allowed under their jurisdiction. But if you're worried that you won't have access to your COVID-19 check, get in touch with your bank or the collection agency you've been working with to assess their policies and see if you can work out another payment plan.