California will stop most debt collectors from garnishing the federal stimulus checks of state residents through an executive order Gov. Gavin Newsom announced Thursday.
Collections agencies who have already taken stimulus checks to pay off debt will have to return the money, Newsom said. The policy does not apply to payments for spousal and child support or restitution for crime victims so federal checks can still be garnished to pay those forms of debt.
Meanwhile, as part of a multi-state effort led by Illinois, 21 of California’s largest 24 student loan providers have agreed to a 90-day forbearance on all student loan debt — a grace period accompanied by no late fees, penalties or any impact on one’s credit score, Newsom said.
An estimated 1.1 million Californians will receive the student loan relief, he said.
The governor announced help for borrowers Thursday after more than 3 million Californians filed for unemployment during the COVID-19 pandemic. Over the past month, the state’s Employment Development Department has processed claims amounting to nearly $4 billion, Newsom said.
About 26 million Americans have filed for unemployment since mid-March, when mass closures related to the COVID-19 pandemic first took hold. In California, 3.3 million residents have applied for unemployment benefits since March 12, the day after Newsom announced a sweeping statewide order banning all non-essential social gatherings.
“March 12 marks a moment where we started to see a big spike in the total number of (unemployment) applications,” Newsom said.
To handle the surge in claims, the Employment Development Department has hired hundreds more personnel and has more than 1,300 workers processing claims seven days a week, the governor said. Covered California and the state’s tax board are also assisting the agency. The EDD’s call center hours were also significantly expanded last week.
For now, most non-essential businesses will remain closed and many out of work as public health officials warn of the continued need for social distancing.
California’s efforts to shut down businesses and public gatherings after reporting some of the earliest cases of COVID-19 have been widely credited with preventing more infections. Despite a “stabilization” in the number of hospitalizations and ICU patients, Newsom said, the still-climbing death toll indicates restrictions will have to stay in place.
On Thursday, California saw its deadliest day of the outbreak yet with 115 more patients reported dead.
