Millions ‘could have coronavirus stimulus checks taken by debt collectors who are trying to seize bank accounts’ – The Sun
THE U.S. Treasury is sending out 80 million stimulus checks this week in a bid to support Americans during the coronavirus pandemic.
But it has now been revealed many residents are at risk of immediately losing the money.
A loophole in the law means debt collectors can take the money to satisfy credit card, medical, or private student loan debts.
The process known as garnishment means millions of Americans could see their stimulus checks taken by creditors in the coming weeks.
The stimulus payments are designed to provide emergency financial support during the coronavirus pandemic.
Though high-income earners are excluded, a majority of people are eligible for some money.
The $2.2 trillion congressional coronavirus relief plan, known as the CARES Act, was passed in March but did not shield the stimulus payments from certain private debt collectors or child support payments.
The relief plan did protect the money from being taken to cover unpaid taxes or federal student loan payments.
Some 25 state attorneys general, as well as Senators Sherrod Brown, Josh Hawley, Elizabeth Warren, and Ron Wyden, have also called on the Treasury to treat the checks as benefits, which would protect them from being diverted for private debt.
Twenty-five state attorneys general and the Hawaii Office of Consumer Protection this week wrote to Treasury Secretary Steven Mnuchin, calling on him to treat the checks as benefits, which would protect them from being diverted for private debt.
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.
The letter wrote: "Unfortunately, in what appears to be a legislative oversight, the CARES Act does not explicitly designate these emergency stimulus payments as exempt from garnishment, as similar government payments (such as social security, disability and veterans’ benefits) are."
The attorneys general went on to cite a line in the CARES Act that they say would allow the Treasury to direct banks to refrain from garnishing the payments.
They wrote: “The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section," referring to the distribution of the payments.
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The senators are now appealing directly to banks and credit unions, requesting they do not offset their customers’ stimulus payments to pay for any fees, charges, or allegedly past due debts amid the pandemic.
Debt is one of the most common issues facing U.S. consumers.
On Thursday, the Department of Labor announced over 5 million Americans filed for unemployment in the past week, bringing the total for the month to 22 million.
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