New bill could stop $1,200 coronavirus stimulus checks being seized by debt collectors
A NEW bipartisan bill has been unveiled aimed at stopping private debt collectors gobbling up stimulus checks.
It comes amid fears creditors could use a loophole to seize $1,200 intended for household expenses.
The process known as garnishment means millions of Americans could see their stimulus checks taken by creditors in the coming weeks.
The emergency payments are designed to provide emergency financial support during the coronavirus pandemic which has so far killed more than 97,000 Americans and made more than 30 million jobless.
High-income earners are excluded, but a majority of people are eligible for some money.
The $2.2 trillion congressional coronavirus relief plan, known as the CARES Act, was passed in March.
But it did not shield the stimulus payments from certain private debt collectors or child support payments.
Now a new bipartisan bill has been unveiled that would stop stimulus checks from being garnished by private debt collectors.
We established these recovery rebates to help individuals and families... not establish them just so debt collectors could swoop in and undermine that purpose
Senator Chuck Grassley
The bill was introduced by the chairman and ranking member of the Senate Finance Committee, Senators Chuck Grassley and Ron Wyden, respectively, along with committee members Sherrod Brown and Tim Scott.
It is designed to close the loophole which puts the money at risk.
Senator Grassley said: "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. Our bill will add additional protections from garnishment, preserving congressional intent and shielding folks who need the help."
Senator Wyden echoed this, saying: "This is a once-in-a-lifetime economic crisis.
"Relief was intended for struggling families, not predatory debt collectors.
"Our legislation would ensure help gets to the folks who need it to pay their bills."
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If the bill were to pass, the Treasury Department would be directed to tag stimulus payments made via direct deposit, which would allow banks to identify and protect them from debt collectors.
It would also prevent garnishment for individuals who received paper checks when being deposited.
Meanwhile the senators are now appealing directly to banks and credit unions, requesting they do not offset their customers’ stimulus payments to pay for any fees, charges, or allegedly past due debts amid the pandemic.
Debt is one of the most common issues facing U.S. consumers.
On Thursday, the Department of Labor announced over 5 million Americans filed for unemployment in the past week, bringing the total for the month to 22 million.
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