Senators Introduce Bill to Prevent Garnishment of Relief Payments

Some area residents may have fallen victim to a loophole in the recent CARES Act legislation which was to provide up to $1,200 in relief payments to taxpayers. Some may be wondering where their payments actually are and it may be in the hands of debt collectors.

 Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio), Finance Committee Ranking Member Ron Wyden (D-Ore.) and Sen. Tim Scott (R-S.C.) introduced a bill to protect recovery payments provided in the recent CARES Act pandemic response legislation from garnishment by private debt collectors.

“We established these recovery rebates to help individuals and families through the tough times of this pandemic. We did not establish them just so debt collectors could swoop in and undermine that purpose. Our bill will add additional protections from garnishment, preserving congressional intent and shielding folks who need the help,” Grassley said.

“During this public health crisis, we must come together to protect our collective health, and ensure that workers have the tools they need to rebuild and recover from the economic fallout of this crisis,” Brown said. “Congress came together to pass the CARES Act, which provided money to help working families pay for food, medicine, and other basic necessities– it’s not for debt collectors. Our bill will protect these funds and ensure working families receive the help they need.”

“This is a once-in-a-lifetime economic crisis. Relief was intended for struggling families, not predatory debt collectors. Our legislation would ensure help gets to the folks who need it to pay their bills,” Wyden said.

Under Section 2201 of the CARES Act, Congress provided for “recovery rebates” of up to $1,200 for qualifying individuals, along with an additional $500 per dependent child, to mitigate the financial blow of COVID-19 on our families and economy. To ensure that American families receive the full amount of this intended relief, the CARES Act does not allow for the payment to be reduced, or “offset,” for past tax debts or other debts owed to federal or state governments. However, CARES Act payments are not protected from being garnished by private debt collectors. As a result, many families have not received the payments that they were depending on.

This bill ensures that the CARES Act payments go to helping American families, not debt collectors:

·      For any electronic payments, such as direct deposit, the bill directs the Treasury Department to encode payments so that banks can identify and protect these payments from being garnished by debt collectors;

·      For other payments, such as checks, the bill allows individuals to request that their banks or other financial institution protect the payments from being garnished by debt collectors and authorizes the financial institutions to do so.

Show More
Check Also
Back to top button