Senators Want To Keep CARES Money Away From Debt Collectors

Two U.S. senators are urging Treasury Secretary Steven Mnuchin to shield taxpayers from having COVID-19 stimulus payments seized by debt collectors.

In a bipartisan move, Sen. Sherrod Brown (D-Ohio) and Sen. Josh Hawley (R-Mo.) have asked the Treasury to protect direct payments to taxpayers, CNBC reported on Friday (April 10).

There is a precedent for the request, as debt collection companies are blocked from taking Social Security payments. The measure, as it is written, fails to protect payments, with the exception of child support, from collectors.

If the request is approved, it would allow Americans to keep money they receive from the $2 trillion CARES Act enacted last month designed to mitigate the economic fallout of the coronavirus pandemic. To help families through the crisis, the legislation offers income-eligible individual taxpayers lump-sum payments up to $1,200, and $2,400 for couples with $500 added for every dependent. Those who are unemployed will receive an additional $600 weekly for four months.

The two lawmakers said they fear if debt collectors garnish the payments, Americans will be no better off than they were before the COVID-19 aid package.

“Congress included this critical relief in order to help American families struggling to pay for food, medicine, and other basic necessities during the novel coronavirus (COVID-19) pandemic and resulting economic crisis,” Senators Hawley and Brown wrote in a letter to Mnuchin on Thursday (April 9). “If Treasury fails to take action, the CARES Act direct payments are at risk of being seized by debt collectors. That is not what Congress intended.”

The National Consumer Law Center told CNBC it has lobbied the Treasury to enact new rules to protect people in debt, and is urging states to take action if the Treasury does not.

“Payments are coming very soon,” said Lauren Saunders, associate director of the National Consumer Law Center. “If states don’t act immediately, in some ways, people may end up worse,” she said, noting that debt collectors also have the ability to freeze bank accounts. It’s hard for people to focus on, but this is about people eating.”