When the first stimulus checks were distributed in the U.S. in 2020 due to the COVID-19 crisis, it came as a huge relief for millions of people. But for those contemplating bankruptcy, it brought a new worry.

“Will bankruptcy take away my stimulus check?”

This has become a common question for bankruptcy attorneys across the nation. So let’s clear up your concerns about bankruptcy and your stimulus money. We’d also like to alert you to a smart way you can use your stimulus check to erase your debt.

Am I Going to Lose My Stimulus Check in Bankruptcy?

You’ll be happy to hear that the Consolidated Appropriation Act (CCA), which was passed in December of 2020, included protections for people who are in bankruptcy. It added “recovery rebates” to a list of exclusions that can’t be taken during the bankruptcy process.

So if you received the $600 stimulus payment or the $1,200 payment for married couples, it can’t be taken from you as part of your bankruptcy. Bankruptcy trustees across the nation were cautioned that they shouldn’t touch that money.

What About an Additional Stimulus Check?

The CARES Act seems to continue these protections as we move forward with additional stimulus payments. As long as Congress continues to authorize them, they should be protected from seizure during bankruptcy.

While you may or may not have actually received an additional stimulus check yet, it’s good to know you don’t have to worry about losing it. And it may present a great opportunity to maximize the benefits of bankruptcy in your financial situation.

Instead of throwing your stimulus check away by paying old debt, you could put it to better use. A bankruptcy attorney can help you use your stimulus money to pay the costs associated with your bankruptcy, making a much bigger impact on your finances and your life.

How to Use a Stimulus Check for a Fresh Financial Start

To understand how to put your stimulus check to its best use, let’s look at an example. Imagine that you have $25,000 worth of old debt you’ve been trying to pay off for years, but are making very little progress.

This is a common scenario because the average American has $90,000 in total debt, about $20,000 of which is unsecured debt like medical bills and credit card debt. It can take a lifetime to pay it all off.

Take a moment to think about what happens if you simply use your government stimulus check to make a one-time payment toward your debt. With a $600 check or even a $2,000 check, you’ve barely made a dent in it.

Poof! Now your check is gone, but your debt remains.

Instead, think about what would happen if you used your stimulus check to fund the costs of filing for Chapter 7 bankruptcy. In this scenario, that check pays for a process that wipes out most or all of your old debt.

When your bankruptcy concludes, you have a clean slate and a fresh start. You used your stimulus check to clear away a mountain of debt, not to mention the heavy burden of stress and worry you’d been feeling.

Here’s Why You Need a Bankruptcy Attorney NOW

As you can see, making a savvy choice with your stimulus check could completely change your life. One government check goes a long way when it comes to bankruptcy!

So don’t let your stimulus check slip through your fingers before contacting an experienced bankruptcy attorney. At Sawin & Shea, we offer a free video consultation about how to spend your stimulus check wisely and clear away old debt.

Sawin & Shea—Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process.

Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.