How to Protect Your CARES Act Stimulus Check and Bank Accounts in California

Learn how new California laws protect coronavirus assistance and bank account funds.

By , Attorney

Californians no longer need to worry about creditors seizing the CARES Act stimulus funds deposited into their bank accounts. New protections ensure Californians have the money to pay rent, utilities, and other necessities before creditors receive anything.

Learn how Governor Newsom's executive order protecting coronavirus relief payments and two new bank account levy laws will help you keep the funds you need safe from creditors.

California Protects CARES Act Stimulus Checks From Debt Collection

On April 23, 2020, California Governor Gavin Newsom took action to protect CARES Act coronavirus relief funds from creditors by issuing an executive order closing a loophole that gave quick-moving debt collectors access to stimulus money. Here's how it works:

  • Any federal, state, or local government financial assistance made in response to the COVID-19 pandemic, including CARES Act stimulus payments, are exempt from any attachment, levy, execution, or garnishment.
  • You won't have to complete a form or make a motion with the court to protect the funds.
  • Debt collectors who have already seized funds must return them to the recipient if the funds are traceable to COVID-19 relief (this could be problematic if stimulus funds were commingled with other funds in a single account—talk with a lawyer).
  • The exemption doesn't apply to a judgment awarding child support, spousal

support, or family support, or any criminal restitution payable to victims.

You can find California Executive Order N-57-20 exempting all government assistance related to COVID-19 from attachment, levy, execution, or garnishment under "Executive Orders" on the Office of Governor Newsroom webpage.

Two New California Laws Protect Against Bank Levies

Californians no longer need to worry about creditors using a bank levy to drain entire bank accounts. Two new laws will protect at least some portion of a bank balance—possibly all of it. (California Code of Civil Procedure (CCP) CCP § 704.225 effective January 1, 2020; CCP § 704.220 effective September 1, 2020).

California Protects Bank Balances Needed for Support

As of January 1, 2020, a creditor can't seize any funds in a bank account that you need to pay for necessities of life, such as food, rent, utilities, and other living expenses. While this law might protect your entire bank balance, it has downsides. It doesn't protect a specific amount, and it isn't automatic. You'll have to object to the bank levy and prove the amount you need for food, rent, utilities, and other necessary living expenses (more below). If you win, the seized funds will be returned to you.

Your bank checking or savings account will qualify for the exemption. (Check the definition of "deposit account" in Commercial Code section 9102(a)(29) to see if the exemption would apply to another type of account.)

This law took effect on January 1, 2020, so it is valid now. You can read the text of CCP § 704.225 on the California Legislative Information website.

California Protects a Minimum Account Balance

This law went into effect on September 1, 2020, and it will likely be well received. It protects at least $1,788 or "…an amount equal to or less than the minimum basic standard of adequate care for a family of four…." from creditors.

Because it's automatic, the bank must leave that much in your account. There's no requirement to fill out forms or file an objection to qualify for this exemption. Your bank checking or savings account will qualify for the exemption. If you're concerned about another account, check the definition of "deposit account" as defined in Commercial Code section 9102(a)(29).

You can read the entire text of CCP § 704.220 on the California Legislative Information website.

Learn More About California Property Exemptions

California exemption laws protect a certain amount of property people need to work and live from creditors. (The California Code of Civil Procedure (CCP) § 704 exemption series protects property from debt collectors; the § 703 exemption series is available only in bankruptcy cases).

Also, a creditor can't wipe out your bank account balance just because you've fallen behind on a bill. A creditor must go to court and get a money judgment against you, or have a statutory right to collect. Learn more about how creditors enforce judgments.

If the Sheriff serves you with a notice of a bank levy, you'll have ten days to file forms to prevent the levy. The Sheriff will provide the Claim of Exemption form (EJ-160) and Financial Statement (EJ-160) form along with the notice of the levy.

Learn more about collections and debt management.

Updated: October 19, 2020

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