A bipartisan group of senators is proposing a bill to stop any garnishments on relief payments sent out during the coronavirus pandemic.
“We established these recovery rebates to help individuals and families through the tough times of this pandemic,” GOP Iowa Sen. Chuck Grassley said. “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.”
Along with Grassley, the bill is also supported by Democratic Ohio Sen. Sherrod Brown and Republican South Carolina Sen. Tim Scott.
The CARES Act passed earlier this year provided recovery payments of up to $1,200 for qualifying individuals and an additional $500 for each dependent child a family has. The legislation did not allow for payments to be reduced, or “offset,” for tax or other debts owed to federal or state governments.
The payments, however, were not protected from private debt collectors, who could still garnish the relief funds if a person owed money to a private institution. The new proposed bill would direct the Treasury Department to encode direct deposit payments so banks can identify and protect those payments from being garnished by debt collectors.
For other forms of payments such as checks, individuals can request that their banks or other financial institutions authorize protections for their payments from being garnished by debt collectors.
“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.”
