Senate Passes Bill Preventing Collectors From Garnishing Stimulus Payments

It turns out there are some things that everyone in the Senate can agree on, and it actually pertains to the debt collection industry.

The Senate yesterday unanimously passed S. 3841, a bill that protects the stimulus funds under the Coronavirus Aid, Relief, and Economic Security Act from being garnished by debt collectors, similar to how Social Security payments are exempt from being garnished.

“This is a common sense measure that will ensure the $1,200 Economic Impact Payments Congress provided to help individuals meet essential needs during these trying times don’t instead end up in the pockets of creditors and debt collectors,” said Sen. Chuck Grassley [R-Iowa], the chairman of the Senate Finance Committee and sponsor of the bill, in a statement.

Under the rules of Congress, the bill the Senate passed can not be sent to the House of Representatives, because it is a tax bill. The House, though, can introduce and pass an exact replica of the Senate bill, which would then be sent to the Senate for approval prior to heading to the President for his signature or veto.

“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,” said Sen. Sherrod Brown [D-Ohio], the ranking member of the Senate Banking Committee and a sponsor of the Senate bill, according to a published report.

When it was enacted in March, the 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.

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