Congress won’t block debt collectors from siphoning off stimulus checks anytime soon, after Sen. Pat Toomey (R-Pa.) objected Thursday to quickly approving a bill that would protect the $1,400 payments.
Sens. Sherrod Brown (D-Ohio) and Ron Wyden (D-Ore.) asked the Senate for unanimous consent to disallow private debt collectors from taking a cut from the checks, which were part of the recent $1.9 trillion stimulus package.
“If the Senate doesn’t pass this bill, predatory debt collectors will continue to seize relief payments for anything from credit card payments to medical debt,” Wyden said.
Congress blocked debt collectors from seizing the $600 checks authorized by the December relief bill, but Democrats said the Senate parliamentarian disallowed similar protections to be used in the special budget process Democrats used to pass the American Rescue Plan with only 50 votes earlier this month.
Toomey said it was Democrats’ fault that the bill lacked the protections, since they should have compromised with Republicans and passed a spending bill that could have gotten 60 votes in the Senate.
Toomey also said debt collectors are merely pursuing “valid legal claims” against people who “owe money to someone else and that someone else has gone to court, and it’s been adjudicated.”
The bill Toomey blocked would have prevented garnishments by telling the IRS to issue deposits with a signal to banks that they should not honor court orders to hand the money over.
It may be too late for most people anyway, as the Treasury Department announced earlier this week that 90 million payments had already been sent.
“These payments have already gone out the door,” Toomey said. “The garnishment happens automatically. It’s already happened!”
It’s not clear if Democratic leaders want to bother with running the Brown-Wyden bill through the cloture process, which can take several days.
“We will keep trying,” Brown told HuffPost.
Lawmakers also failed to protect the first round of $1,200 stimulus payments in the Coronavirus Aid, Relief and Economic Stability (CARES) Act in March 2020. But after they passed the CARES Act, the Senate unanimously approved a bill to disallow garnishments, meaning no Republicans objected. (Most of them had voted for the stimulus act itself.)
The Democratic-controlled House of Representatives never took up the protections, and debt collectors seized an unknown number of CARES Act payments.
Jerri Scranton of Schenectady, New York, told HuffPost her husband was left with only $153 of his $1,200 payment last year after ITT Technical Institute snatched the rest for an unpaid debt from computer classes he’d taken in 2006.
The defunct for-profit education company sicced debt collectors on its former students even after it went bankrupt in 2016, prompting lawsuits. The Consumer Financial Protection Bureau settled with the company in September, halting collection on the loans.
Scranton, 59, said it would have been one thing if the government had taken the money because her husband had owed child support or taxes, but it was especially unfair that it was garnished by a defunct entity.
“I’m very angry about that,” Scranton said. “The company went bankrupt!”
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