Stimulus Legislation “Loophole” Allows Garnishment of Relief Checks
This is one of them things that can make a bad situation involving people already under pressure exponentially worse:
Millions of people received their stimulus payments from the federal government this week, but some are at risk of immediately losing the money if they owe credit card, medical, or private student loan debts.
A loophole in the law could mean some of those who are most in need of the emergency aid don’t get the money. About a third of Americans — some 71 million adults — have debt in collections and could be impacted, according to the National Consumer Law Center.
The $2.2 trillion congressional coronavirus relief plan passed in March did not shield the stimulus payments from certain private debt collectors, though it specifically protected the money from being taken to cover unpaid taxes or federal student loan payments. (The law does allow the money to be garnished for child support payments.)
Twenty-five state attorneys general and the Hawaii Office of Consumer Protection warned about the problem in a letter sent this week sent to Treasury Secretary Steven Mnuchin, asking him to issue guidance protecting the payments from private debt collectors, too.
Democratic Sen. Sherrod Brown of Ohio and Republican Sen. Josh Hawley of Missouri also called on the Treasury Department to prevent garnishments for private debts.
Despite the bipartisan push, Treasury hasn’t issued new guidance. The agency did not respond to a request for comment Wednesday