As Congress considers an additional COVID-19 rescue bill, the American Bankers Association today joined a coalition of 17 other financial trade groups calling on lawmakers to include language in the bill to ensure that any economic impact payments will be protected from assignment or garnishment. Without this language, the groups warned that financial institutions would be required to comply with court-ordered garnishments, which could prevent relief from reaching families in need.
“While depository institutions and even many debt collectors and debt buyers believe that economic impact payments should be exempt from garnishment orders, depository institutions are obligated to comply with court orders, and unless Congress includes the attached language, they will be forced to pay some creditors who attempt to garnish and freeze bank accounts,” the groups said. “We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment. 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.”