Healey on Monday also signed onto a letter (pdf) led by New York Attorney General Letitia James urging Mnuchin to issue "a regulation or guidance designating CARES Act payments as 'benefit payments' exempt from garnishment." The letter was signed by 25 state attorneys general. my office is putting the debt collection industry on notice that these payments are off limits." "These payments are supposed to help individuals and families put food on the table during this crisis, not enrich debt collectors," Healey said in a statement. On Monday, Massachusetts Attorney General Maura Healey issued guidance stating that the $1,200 payments "are exempt from seizure or garnishment by creditors under Massachusetts law." Only JPMorgan Chase said they would not use CARES Act payments to offset debts. I checked with the five largest consumer banks. "Congress did give Treasury the authority under Section 2201(h) of the CARES Act to write rules exempting the payments from private debt collectors," Dayen noted, but the Treasury Department-headed by former Goldman Sachs executive Steve Mnuchin-has thus far refused to exercise that authority despite pressure from Democratic members of Congress and state attorneys general.
"The payments are defined as tax credits and not federal benefits, making them subject to 'garnishment,' in which a debt collector that wins a judgment in court can seize anything of value held by the debtor." "But Congress did not extend this exemption to private debt collection," Dayen wrote. The direct payments were authorized under the CARES Act, a massive coronavirus stimulus package President Donald Trump signed into law last month.Īs Dayen explained, Congress explicitly exempted the one-time stimulus payments from collection under the CARES Act "if the debt is owed to federal or state agencies, unless the debt involves a child support payment." Those for whom the government does not have direct deposit information-a group that is disproportionately low-income-could be forced to wait up to five months to receive paper checks in the mail. "Secretary Mnuchin needs to ensure that these $1,200 checks go straight into Americans pockets where they belong."Īmericans with direct deposit information on file with the Internal Revenue Service are expected to begin receiving the $1,200 payments in their bank accounts this week, provided that their banks do not opt to seize the money.
"This money should be going toward food, rent, and medicine-it's not the time to hand out favors to debt collection industry donors or pad some big bank's bottom line," said Funk. "It's the middle of a pandemic," said Funk. renters couldn't make rent this month, the Treasury Department is pointing out opportunities for banks and debt collectors to steal Americans' relief checks out from under them," Jeremy Funk, spokesperson for consumer advocacy group Allied Progress, said in a statement responding to Kent's comments. In an audio recording from the webinar obtained exclusively by the Prospect, Ronda Kent, chief disbursing officer at the Treasury Department's Bureau of the Fiscal Service, told bankers that "there's nothing in the law that precludes" financial institutions from seizing a person's payment and using it to pay off the individual's debts. "The Treasury Department effectively blessed this activity on a webinar with banking officials last Friday," The American Prospect's David Dayen reported Tuesday. Maura Healey, Massachusetts Attorney General "These payments are supposed to help individuals and families put food on the table during this crisis, not enrich debt collectors." banks a green light to seize a portion or all of the one-time $1,200 coronavirus relief payments meant to help Americans cope with financial hardship and instead use the money to pay off individuals' outstanding debts-a move consumer advocates decried as cruel and unacceptable. President Donald Trump's Treasury Department has given U.S.
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