Senators Introduce Bill to Prevent CARES Act Payments from Garnishment

U.S. Senators Sherrod Brown (D-Ohio), Chuck Grassley (R-Iowa), Ron Wyden (D-Ore.), and Tim Scott (R-S.C.) introduced a bill last week to protect CARES Act pandemic relief payments from garnishment by private 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,” said Senator Brown, who serves as Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs. “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.”

“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,” Grassley said. “Our bill will add additional protections from garnishment, preserving congressional intent and shielding folks who need the help.”

The pandemic relief payments, under Section 2201 of the CARES Act, cannot be reduced or offset for past tax debts or other debts Americans may owe to state or federal governments. However, the payments are not currently protected from private debt collectors under the legislation. Consequently, many Americans have not received the payments they were anticipating and relying on.

The Senators’ bill assures that relief payments go to Americans by directing the Treasury to encode electronic payments so banks can protect them. For check payments, the bill allows people to request that banks and other financial institutions protect payments from garnishment, and authorizes them to do so.

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