PROVIDENCE, R.I. – Attorney General Peter F. Neronha issued guidance last week reminding creditors, debt collectors and financial institutions that stimulus payments resulting from the federal government's American Rescue Plan Act are exempt from seizure or garnishment by debt collectors.

"While we seem to be heading in the right direction, we are by no means done with this public health and economic crisis," said Attorney General Neronha. "These payments are a lifeline for so many Rhode Island families who have been devastated by the pandemic. They belong to the recipients and are not fair game for debt collectors."

The guidance reminds creditors that if they attempt to garnish a Rhode Islander's American Rescue Plan Act payment, the Attorney General's Office is prepared to take action to enforce the law and protect Rhode Islanders from unlawful collection practices. The Office issued similar guidance in April 2020, following the initial round of stimulus payments issued by the federal government under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The guidance is based on Rhode Island law that exempts certain income and property – for example, certain funds provided for relief of the poor or in aid of unemployment, public assistance, and particular retirement benefits – from seizure or garnishment by creditors.

Congress recently passed the American Rescue Plan Act, which provides economic impact payments to individuals and families affected by the COVID-19 pandemic. Section 9601 of the American Rescue Plan lays out a means-tested eligibility criteria for a one-time cash payment in the form of a refundable tax credit of up to $1,400 per person, or $2,800 in the case of eligible individuals filing a joint return, plus an additional $1,400 per dependent child. Individuals with higher incomes will receive a lesser payment, or no payment at all if their incomes are above a threshold amount.

Because the American Rescue Plan Act does not explicitly designate these emergency stimulus payments as exempt from garnishment, as similar government payments (such as social security, disability and veterans' benefits) generally are, the Office developed the guidance to advise Rhode Island banking institutions and lenders.

View the full guidance on American Rescue Plan Act Relief funds

Concerns about seizure or debt collection of American Rescue Plan Act payments can be directed to RIAG Consumer Protection team at 401-274-4400 or consumers@riag.ri.gov.

Visit the RIAG COVID-19 Resource Page for more information about how the Office is protecting consumers.

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