Coalition urges Congress to protect stimulus checks from garnishment

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WASHINGTON — Advocates for banks and consumers called on Congress to protect stimulus payments from debt garnishment in a rare show of unity between groups often at odds over financial policy.

Twelve groups sent congressional leaders a letter Tuesday saying lawmakers must ensure full access for consumers to the government-promised funds meant to ease the economic effects of the coronavirus pandemic. The $2 trillion stimulus package includes $1,200 payments for individuals.

They wrote that unless “Congress takes action to provide legal certainty, the families that most need this money — those who are struggling with debt and whose entire bank accounts may have been frozen by garnishment orders — will be not be able to access the funds.”

Industry groups signing the letter included the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, and The Clearing House.

They were joined by the National Consumer Law Center, Center for Responsible Lending, Consumer Federation of America, Consumer Reports, National Association of Consumer Advocates, Americans for Financial Reform Education Fund and the US Public Interest Research Group.

“While the IRS has already sent a significant number of the payments, it is not too late to act,” the groups wrote. “Many of the payments yet to be sent will go to the lowest income individuals who do not file tax returns. We believe it is imperative that Congress make it clear that these payments are treated as benefits subject to the federal exemption from garnishment.”

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