Exempt stimulus money to be garnished by debt collectors: Senator Harris to Mnuchin

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Senator Kamla Harris, Friday, sent a letter to the 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, along with a group of other Senate Democrats. Harris (D-Calif.), urged Munish to issue regulatory rules that would exempt the stimulus checks from private debt collection.

According to a report published by The Hill, the senators, in the letter to Mnuchin, wrote: “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.”

“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, the letter was signed by 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.), The Hill reported.

The legislation passed last month in the wake of the coronavirus pandemic provides 1,200 indirect 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, with an additional $ 500 per child.

The Senators wrote the letter after audio of Treasury official Ronda Kent discussing with banks how they should handle the coronavirus checks if the account holder had outstanding loans or debt was published by The American Prospect earlier this week. In the audio, Kent can be heard telling banks that 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.) stating that “Congress failed to define these payments as benefits subject to preemption from garnishment” in the coronavirus legislation.

Demanding more clarity in language of the future COVID-19 payments from Congress, the group said, “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 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, The Hill reported.