April 17, 2020

Harris Leads Colleagues in Push to Halt Debt Collectors from Seizing COVID-19 Stimulus Checks

WASHINGTON, D.C.U.S. Senator Kamala D. Harris (D-CA) on Thursday led her colleagues in sending a letter to Treasury Secretary Steven Mnuchin demanding an exemption for direct assistance checks from debt collectors during the COVID-19 pandemic. Families across the nation are in dire need of assistance to pay their rent and put 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,” the Senators wrote.

The Senators continued, “The American people are struggling right now to find ways to navigate the current crisis and keep themselves and their families healthy. They need this assistance more than ever and it is Treasury’s responsibility to act and ensure that every American family who is eligible for the assistance can receive its full benefit. We ask you to ensure that direct assistance checks cannot be garnished for private debt collection purposes.”

Joining Harris on the letter are Senators Durbin (D-IL), Sanders (I-VT), Schatz (D-HI), Murphy (D-CT), Blumenthal (D-CT), Van Hollen (D-MD), Merkley (D-OR), Murray (D-WA), Jones (D-AL), Whitehouse (D-RI), Baldwin (D-WI), Klobuchar (D-MN), Smith (D-MN).

A full copy of the letter can be found here and below. 

April 14, 2020

The Honorable Steven Mnuchin

Secretary of the Treasury

United States Department of the Treasury

1500 Pennsylvania Ave, NW

Washington, DC 20220

 

Dear Secretary Mnuchin:

We write with great concern about guidance that financial institutions recently received regarding the direct payment assistance that Congress passed under the CARES Act. 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.

According to press reports, on a recent webinar with professionals from the financial services industry, Treasury official Ronda Kent told financial institutions that “nothing in the law precluded” institutions from collecting funds from the checks to cover any payments that a payee may owe the institution. While it is true that the CARES Act did not directly exempt the direct assistance payments from private debt collection, that also belies the intent behind the law. Congress wanted to ensure that Americans who have become recently unemployed or are experiencing other hardships as a result of this crisis receive critical financial assistance to help them during this time. In fact, Congress made clear its intent when it provided that federal agencies could not collect outstanding obligations from these stimulus checks. Furthermore, 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. Some of my colleagues have written to you urging you to apply this rulemaking and flagging the exemption of direct assistance payments when they are deposited in customers’ bank accounts.

Providing guidance to financial institutions that implies they are within their rights to garnish direct assistance checks is contradictory to the intent of the CARES Act and the specific bipartisan guidance Treasury received from Congress as to how to implement this part of the law. Treasury must act right away to provide clear guidance that financial institutions may not garnish these checks.

The American people are struggling right now to find ways to navigate the current crisis and keep themselves and their families healthy. They need this assistance more than ever and it is Treasury’s responsibility to act and ensure that every American family who is eligible for the assistance can receive its full benefit. We ask you to ensure that direct assistance checks cannot be garnished for private debt collection purposes.

Given the fact that direct assistance payments will be mailed or deposited directly into banking accounts very soon, we ask that you treat this request with the urgency it requires. We urge you provide a response to our inquiry that includes a timeline as to when Treasury will complete this rulemaking and ensure that no payment will be susceptible to garnishment no later than Friday, April 24, 2020.

We thank you for your attention to this important matter.

Sincerely,

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