Congress should protect CARES Act economic impact payments from being garnished to pay creditors, the American Bankers Association and several other financial groups said today. “America’s banks stand ready to provide full access to funds appropriated for the explicit purpose of helping families make ends meet” in response to the coronavirus pandemic, they explained.
In a letter to congressional leaders joined by the Bank Policy Institute, the Clearing House, the Consumer Bankers Association and the Financial Services Forum, ABA emphasized that the CARES Act exempted EIPs, which are currently being processed, from offsets for debts to government agencies (except for child support) — but not from court-ordered garnishments to pay creditors.
“As a result, banks are obligated to treat them accordingly, which will impose a significant burden for some families facing unprecedented circumstances,” the groups said. “We believe it is imperative that Congress make it clear that these payments are treated as benefits subject to the federal exemption from garnishment.” The groups added that direct deposit payments are easier to protect from garnishment than paper checks.