Joint Consumer-Banks Letter In Favor of Anti-Garnishment Bill

Proposal is Bi-Partisan and Would Broaden CARES Act Protection
Last updated: 5/29/2020

 Letter to Congress from leading consumer groups and bank trade associations supporting S3841, a bi-partisan bill from Senate Finance Committee leaders broadening CARES Act protections to prevent COVID-19 pandemic Economic Impact Payments from being subject to garnishment. Related news release. Excerpt from downloadable letter to Senate Finance Committee Chairman Chuck Grassley R-Iowa), Finance Committee ranking member Ron Wyden (D-Ore.), and committee members Sherrod Brown (D-Ohio) and Tim Scott (R-S.C.):

"Congress passed the CARES Act to help families purchase food and other necessities to make ends meet. Many people were already struggling prior to the coronavirus crisis and millions have now been laid off or had their hours cut. The intense demand for the emergency unemployment benefits that Congress authorized has overwhelmed state unemployment agencies and has led to delays in people receiving those benefits, especially for self-employed or 1099 workers who do not fit within previous unemployment application procedures. This makes access to the economic impact payments all the more essential.

Under the CARES Act, Congress exempted these payments from offset for debts owed to federal and state agencies, except in the case of child support, but did not address court-ordered garnishments to pay creditors. While financial institutions and even many debt collectors and debt buyers believe that the payments should be exempt from garnishment orders, some creditors have continued to attempt to garnish and freeze bank accounts. Banks are obligated to comply with garnishment orders unless lifted by a court. Yet many consumers do not know that they may have a legal defense to garnishment orders under state exemption laws or for other reasons, and the crisis has also made it difficult to impossible to access attorneys or the courts – presenting due process issues. The lack of clear protection for the stimulus payments imposes a significant burden for some families facing unprecedented circumstances."


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