Senate Passes Scott Legislation to Prevent Garnishment of Relief Payments
WASHINGTON – The United States Senate unanimously passed S. 3841, a bill to protect recovery payments provided in the recent CARES Act pandemic response legislation from garnishment by private debt collectors. The bill was introduced by U.S. Sens. Tim Scott (R-S.C.), Chuck Grassley (R-Iowa), Sherrod Brown (D-Ohio), and Ron Wyden (D-Ore.).
“Congress passed the CARES Act to help citizens withstand the economic sufferings brought on by the pandemic, and I will do everything in my power to ensure that those hardships are not compounded,” said Senator Tim Scott. “I urge my colleagues in the House to pass this measure as soon as possible so that hard working American families are able to receive the relief they so desperately need.”
Under Section 2201 of the CARES Act, Congress provided for “recovery rebates” of up to $1,200 for qualifying individuals, along with an additional $500 per dependent child, to mitigate the financial blow of COVID-19 on our families and economy. To ensure that American families receive the full amount of this intended relief, the CARES Act does not allow for the payment to be reduced, or “offset,” for past tax debts or other debts owed to federal or state governments. However, CARES Act payments are not protected from being garnished by private debt collectors. As a result, many families have not received the payments that they were depending on.
This bill ensures that the CARES Act payments go to helping American families, not debt collectors:
- For any electronic payments, such as direct deposit, the bill directs the Treasury Department to encode payments so that banks can identify and protect these payments from being garnished by debt collectors;
- For other payments, such as checks, the bill allows individuals to request that their banks or other financial institution protect the payments from being garnished by debt collectors and authorizes the financial institutions to do so.