Senators offer bill to prevent relief payments from being seized by private debt collectors

Senators offer bill to prevent relief payments from being seized by private debt collectors
© Greg Nash

A group of senators on Friday rolled out a bipartisan bill to prevent Americans' coronavirus relief payments from being garnished by private debt collectors.

The bill was introduced by Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleySenate GOP divided over whether they'd fill Supreme Court vacancy  Republicans dismiss Trump proposal to delay election Timeline for GOP's Obama probe report slips as chairman eyes subpoenas MORE (R-Iowa), Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenFrustration builds as negotiators struggle to reach COVID-19 deal On The Money: Unemployment benefits to expire as coronavirus talks deadlock | Meadows, Pelosi trade criticism on stalled stimulus talks | Coronavirus recession hits Social Security, Medicare, highway funding Unemployment benefits to expire as coronavirus talks deadlock MORE (D-Ore.), and committee members Sherrod BrownSherrod Campbell BrownOvernight Defense: Guardsman to testify Lafayette Square clearing was 'unprovoked escalation' | Dems push for controversial Pentagon nominee to withdraw | Watchdog says Pentagon not considering climate change risks to contractors Democrats urge controversial Pentagon policy nominee to withdraw Chamber of Commerce, banking industry groups call on Senate to pass corporate diversity bill MORE (D-Ohio) and Tim ScottTimothy (Tim) Eugene ScottLobbyists see wins, losses in GOP coronavirus bill Revered civil rights leader Rep. John Lewis lies in state in the Capitol GOP plan would boost deduction for business meals MORE (R-S.C.). Brown is also the top Democrat on the Senate Banking Committee.

"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 in a news release. "Our bill will add additional protections from garnishment, preserving congressional intent and shielding folks who need the help.”

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The $2.2 trillion coronavirus relief law that Congress passed in late March provides for one-time payments to most Americans of up to $1,200 per adult and $500 per child. The Treasury Department said earlier this week that it has already delivered 140 million payments.

The law explicitly said that the payments could not be reduced if someone has past tax debts or other debts to federal and state governments.

But it didn't state that the payments couldn't be garnished by private debt collectors, meaning that some taxpayers have not received the payments they expected. Lawmakers started expressing concerns about the private debt collection issue before the payments even started to be sent out.

The senators' bill would direct Treasury to encode relief payments sent by direct deposit so that banks can identify them and prevent them from being garnished by collectors. The bill also would allow people who received their payments by paper check to request that their bank protect the payments from being garnished, and it would authorize banks to make those protections.

"Our bill will protect these funds and ensure working families receive the help they need,” Brown said.