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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 GrassleyChuck GrassleyOn The Money: Treasury announces efforts to help people get stimulus payments | Senate panel unanimously advances Yellen nomination for Treasury | Judge sets ground rules for release of Trump taxes Senate panel unanimously advances Yellen nomination for Treasury Finance Committee vote on Yellen nomination scheduled for Friday MORE (R-Iowa), Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenHillicon Valley: Intelligence agency gathers US smartphone location data without warrants, memo says | Democrats seek answers on impact of Russian hack on DOJ, courts | Airbnb offers Biden administration help with vaccine distribution Intelligence agency gathers US smartphone location data without warrants, memo says Senate panel unanimously advances Yellen nomination for Treasury MORE (D-Ore.), and committee members Sherrod BrownSherrod Campbell BrownSenators introduce bill to award Officer Goodman the Congressional Gold Medal Senate panel unanimously advances Yellen nomination for Treasury Senate Democrats file ethics complaint against Hawley, Cruz over Capitol attack MORE (D-Ohio) and Tim ScottTimothy (Tim) Eugene ScottGOP senator calls Biden's COVID-19 relief plan a 'non-starter' GOP senator questions constitutionality of an impeachment trial after Trump leaves office Biden's minimum wage push faces uphill battle with GOP 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.