Press Release  AG Healey to Debt Collectors: Child Tax Credit Payments Are Off Limits

BOSTON — Attorney General Maura Healey today issued guidance to protect families who have begun receiving a federal child tax credit this week from debt collection practices. The AG’s guidance ensures that these payments go directly to help families meet the needs of their children.

Under President Biden’s American Rescue Plan Act of 2021, Massachusetts residents with qualifying children have started to receive automatic monthly payments of the federal child tax credit, as of July 15. Massachusetts residents with qualifying children should receive the first half of the value of the child tax credit through direct payments between now and the end of the year, and the remaining sum will be made available when tax forms are filed next year. According to the AG’s guidance, these direct payments are exempt from seizure or garnishment under Massachusetts law. Any attempt to garnish or otherwise seize these funds to collect or attempt to collect a debt violates the AG’s Debt Collection Regulations.

“These payments are critical for families to provide for their children, including many who are struggling to pay for food, childcare, and other basic costs,” AG Healey said. “We are issuing this guidance to put the debt collection industry on notice that these payments are off limits from seizure, and to make sure families are aware of the rights they have under law.”

 On March 11, 2021, President Biden signed into law the American Rescue Plan Act, which in part provides for direct cash assistance to families with qualifying children. Pursuant to the Act, families with children below the age of six can qualify for periodic cash payments totaling up to $3,600, and families with children between six and 17 can receive up to $3,000 in payments. Specific payment amounts are dependent on income. Individuals with modified adjusted gross incomes that exceed $150,000 in the case of a joint return, $112,500 in the case of a head of household, or $75,000 in any other case will receive smaller payments or no payment whatsoever.

Massachusetts law exempts certain income and property from garnishment or attachment by creditors or debt collectors. The purpose of the exemption law is to ensure individuals have enough income and property to provide for basic necessities like housing, food, and utilities.

According to the AG’s guidance, any action, or threat to take action, to garnish, attach, or otherwise seize funds provided through the American Rescue Plan Act will be considered a violation of the AG’s Debt Collection Regulations.

The AG’s Office previously issued similar guidance in April 2020 and March 2021 about stimulus payments under the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act and American Rescue Plan Act.

Visit the AG’s website for more information about the AG’s Debt Collection Regulations and the AG’s Emergency Debt Collection Regulations. The AG’s Consumer Protection Division encourages members of the public to call 617-727-8400 or file a complaint online.

The AG Healey’s COVID-19 resources page has more information about how the office can assist the public during this crisis.

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