A group of Senate Democrats is urging Treasury Secretary Steven Mnuchin to exempt checks being issued as part of last month’s $2.2 trillion coronavirus relief bill from being subjected to garnishment by debt collectors.
Fourteen senators on Friday sent a letter, spearheaded by Sen. Kamala Harris (D-Calif.), to Mnuchin urging him to issue regulatory rules that would exempt the stimulus checks from private debt collection.
“There are concerns that the direct assistance checks that Americans are receiving may be subject to private debt collection, which could potentially deprive Americans of essential assistance that they need in order to pay bills and keep food on the table,” the senators wrote to Mnuchin in the letter, a copy of which was obtained by The Hill ahead of its release.
“We ask you to act right away to use Treasury’s rulemaking authority to exempt Americans’ direct assistance payments from private debt collection so that American families can receive critical assistance to help them get through this unprecedented crisis,” they added.
In addition to Harris, Sens. Dick Durbin (D-Ill.), Bernie Sanders (I-Vt.), Chris Murphy (D-Conn.), Richard Blumenthal (D-Conn.), Chris Van Hollen (D-Md.), Jeff Merkley (D-Ore.), Patty Murray (D-Wash.), Doug Jones (D-Ala.), Sheldon Whitehouse (D-R.I.), Tammy Baldwin (D-Wis.), Amy Klobuchar (D-Minn.) and Tina Smith (D-Minn.) signed the letter.
The coronavirus legislation passed last month provides $1,200 in direct assistance to individuals who make up to $75,000, with the amount scaled down for higher incomes until reaching an annual gross adjusted income of $99,000, where it phases out altogether. An additional $500 per child is also included.
The letter comes after The American Prospect published audio this week of Treasury official Ronda Kent discussing with banks how they should handle the coronavirus checks if the account holder had outstanding loans or debt. According to the audio, Kent told banks there is “nothing in the law that precludes” the funds from being garnished and it is up to banks.
Top banking associations also sent a letter to Sens. Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass.) noting that under the coronavirus bill, “Congress failed to define these payments as benefits subject to preemption from garnishment.”
“As a result, with regard to any legal garnishment, depository institutions have no discretion and are obligated to comply with applicable state laws and court-ordered garnishments,” the groups said, adding that Congress should pass language clarifying future COVID-19 payments.
The senators noted in their letter to Mnuchin that the coronavirus legislation did not directly exempt the direct cash payments from private debt collection, but that it “belies the intent behind the law.”
“Treasury has the rulemaking authority specifically to ensure that as part of its process of implementing the direct payment program, it could ensure that the checks Americans were receiving were exempt from private debt collection,” they wrote.
“We ask you to ensure that direct assistance checks cannot be garnished for private debt collection purposes,” they added.
Harris’s letter comes as the first round of stimulus checks went out this week for individuals who have authorized the IRS to make a direct deposit into their bank accounts. Senate Democrats, noting that money is already being sent out, asked Treasury to complete any rulemaking to protect the checks from private debt collection by April 24.
Brown and Sen. Josh Hawley (R-Mo.) sent their own letter last week to the Treasury Department, urging Mnuchin to use his rulemaking authority to protect the recovery checks from private debt collectors. A group of state attorneys general sent Mnuchin a similar request on Monday.