A bipartisan bill was introduced on Friday in the Senate that would, once and for all, prohibit any stimulus funds received by individuals from being garnished by private debt collectors.
A copy of the legislation, which is being backed by Sen. Chuck Grassley [R-Iowa] and Sen. Ron Wyden [D-Ore.], the chair and ranking member of the Senate Finance Committee, Sen. Sherrod Brown [D-Ohio], the ranking member of the Senate Banking Committee, and Sen. Tim Scott [R-S.C.], can be accessed by clicking here.
When it was enacted in March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provided $1,200 to individuals across the country, as well as $500 per child. But Congress did not include any provision that protected the funds from being garnished. That set off a massive flurry of activity from consumer advocates and state legislators who were concerned that debt collectors and judgment holders would swoop in and take the money right from the bank accounts of people at a time when that money was needed more than ever.
“This is a once-in-a-lifetime economic crisis,” Sen. Wyden said in a statement. “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.”
The bill introduced on Friday in the Senate would instruct the Treasury Department to encode the stimulus payments so they could be identified as coming from the federal government and allow banks to protect the funds, much as they do with other forms of aid, such as Social Security benefits.
“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,” Sen. Grassley said in a press release. “Our bill will add additional protections from garnishment, preserving congressional intent and shielding folks who need the help.”
