Consumer Groups Call on Congress to Protect Stimulus Checks from Debt Collectors

In a joint letter sent to Congress yesterday, 19 consumer and financial industry organizations urged lawmakers to protect the third round of economic impact payments (EIPs) from garnishment so the money gets to the families who most need it. Allowing EIPs to be garnished could impose significant burdens on some families, especially those in communities of color, who are facing unprecedented circumstances during the ongoing pandemic.

These EIPs are intended 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. However, EIPs from the American Rescue Plan Act of 2021 are not exempt from garnishment, unlike the second round of EIPs from the Coronavirus Response and Relief Supplemental Appropriations Act of 2021.

“We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment,” note the consumer groups and financial industry organizations. “Otherwise, the families that most need this money — those struggling with debt and whose entire bank accounts may be frozen by garnishment orders — will be not be able to access their funds. This group includes very low-income families with children, people who have been disconnected from work opportunities for a long period, and many low-income adults now raising children in their…