Senate Passes Bill to Prevent Garnishment of Relief Payments by Private Debt Collectors
Recently, the U.S. Senate passed a bipartisan bill to protect recovery payments supplied by the CARES Act from being garnished by private debt collectors. The bill was introduced in May by Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio), Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Finance Committee Ranking Member Ron Wyden (D-Ore.), and Senator Tim Scott (R-S.C.).
“During this public health crisis, Congress must ensure that hardworking Americans have every tool they need to rebuild and recover from the economic fallout of this crisis,” said Senator Brown in his statement following the passage of the bill. “Congress came together to pass the CARES Act, which provided much needed relief for working families to cover basic necessities, and this legislation would make sure that those payments and any future payments will be protected from garnishment.”
The CARES Act does not allow any of the stimulus payments to be offset for any past debts owed to state and federal governments. However, payments were not protected from garnishment by private debt collectors.
The legislation ensures that electronic payments go directly to American families by directing the Treasury Department to encode payments so banks can protect them from garnishment. For other payments, banks and financial institutions are authorized to protect payments from garnishment if individuals request them to do so.
“The House must immediately take up this bill and ensure that the money allocated to working families by Congress goes to pay for food, medicine, and other necessities, not to debt collectors,” Brown said. “Americans are still suffering from this public health and economic crisis and Congress must step up and provide additional relief.”
Click here to view the full text of the legislation.