Senators Introduce Plan to Protect Economic Impact Payments from Garnishment

A bipartisan group of senators has introduced legislation that would prohibit the garnishment of economic impact payments that individuals received from the federal government.

The law that provided the payments, the “CARES Act,” does not allow for the garnishment of stimulus payments to pay debts owed to the federal and local governments. However, the law did not protect the payments from garnishment by debt collectors for other types of debts.

The Senate legislation would protect the payments from those debt collectors as well.

“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,” said Senate Banking Committee ranking Democrat Sherrod Brown of Ohio. 

“We established these recovery rebates to help individuals and families through the tough times of this pandemic,” said Senate Finance Chairman Chuck Grassley (R-Iowa), another cosponsor. “We did not establish them just so debt collectors could swoop in and undermine that purpose.”

Some state laws prohibit the garnishment of certain deposits, such as the stimulus payments. For instance, shortly after the law was enacted, New York Attorney General Leticia James warned financial institutions not to allow the garnishment of the payments.

A coalition of trade groups, including the Credit Union National Association and the American Bankers Association has called for Congress to prohibit garnishment of the stimulus payments.

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