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Bank collects unemployment check to pay back loans

Posted at 7:52 PM, Apr 06, 2020
and last updated 2020-04-06 19:52:36-04

JACKSON, Mich. — Like many laid-off employees across the state due to the coronavirus pandemic, Jordan Caldwell says he was waiting on his state unemployment check and when it finally came, it was immediately taken out of his account by his credit union.

"I opened up my account and all my funds were gone. The second they hit my account they disappeared," said Caldwell.

Caldwell says the $316 he was slated to receive wasn't much but would have helped take care of his fiance and 2-year-old daughter.

"It was going to help. It'd provide diapers. Everything would go to food," said Caldwell.

Bank records show the money was directly applied to his past-due loans.

"They told me I caused them a loss financially and there was nothing they can do," said Caldwell.

Caldwell says that's the answer he got on Saturday from South Central Credit Union (SCCU). On Monday, SCCU told FOX 47 that it was a mistake and refunded the money.

"Given current circumstances, we are trying to help all members where we can. This does mean a change from normal procedures and communications that typically occur. We did consider this issue resolved promptly after we became aware of the situation. Due to a miscommunication, it was not. We were able to contact the member and provide a resolution for this. We are working the best we can to deal with the current situation and our members who are affected and are trying to address individual cases and provide help in any way possible," a representative with SCCU said in a statement.

Caldwell's situation is not unique and banks do have a right to garnish money.

"They actually do not have a right to garnish any unemployment benefits. What might happen though, since the courts have been closed for a bit here, it could've been that garnishment would've been issued before the courts were closed on a bank account" said Employment Attorney Jefferey Ray.

The state's Unemployment Insurance Agency says money deposited into an account and how that money is withdrawn to cover outstanding loans, is a question for the financial institution. They added, whatever happens when an unemployment check makes it to a personal bank account is out of their purview.

"I'm happy that they were able to give me back my employment funds, but I wish in the future they could handle things a lot differently especially given the situation that we're in right now as a nation with the whole COVID-19 and everything," said Caldwell.

Banks and lenders will not be able to garnish your stimulus checks when that money goes into your account with one exception, any unpaid child support will be deducted from it.

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