Senate passes bill to prevent debt collectors from garnishing stimulus checks

The Senate on Thursday passed bipartisan legislation that would protect coronavirus relief payments from being garnished by banks and debt collectors.

The Senate passed the bill by unanimous consent. 

Legislation Congress passed in March, known as the CARES Act, authorized payments for most Americans of up to $1,200 per adult and $500 per child. The CARES Act prevented the payments from being reduced because of unpaid taxes or other debts owed to state and local governments.

However, it did not prevent private debt collectors from garnishing the payments. The bill the Senate passed on Thursday would protect the stimulus payments from being garnished by banks, similar to how Social Security payments are protected from garnishment.

“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,” Senate Finance Committee Chairman Chuck Grassley (R-Iowa), one of the sponsors of the bill, said in a statement.

Senators urged the House to pass an identical version of the bill. The Senate bill can’t be sent directly to the House because it’s a tax bill, but if the House passes an identical bill and sends it to the Senate, the measure could be passed in the Senate and sent to President Trump, a spokesperson for Grassley said.

“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 (Ohio), the top Democrat on the Senate Banking Committee and a sponsor of the Senate bill.

The Senate’s passage of the bill comes as lawmakers and the White House are working on another coronavirus relief package. Both Republicans and Democrats are interested in including a second round of direct payments in that package.

House Democrats passed a $3 trillion coronavirus relief package in May that would provide for a second round of direct payments and also would prevent direct payments from being garnished by private debt collectors.