Stimulus Payment Protection Bill Blocked in Senate
A bill that would have shielded stimulus checks from private debt collectors got sidelined Thursday when an objection from one Republican senator prevented it from coming up for a vote. But, for anyone who has received their check already, the bill was already too late to help.
Sen. Pat Toomey (R-Pennsylvania) blocked the bill from consideration on the Senate floor Thursday, saying—among other things—that the bill had come too late to prevent court-ordered debt collection (or garnishment) on stimulus payments after the IRS and Department of Treasury issued approximately 90 million stimulus payments, worth $242 billion, in the first week since President Joe Biden signed the American Rescue Plan (ARP) into law.
“These payments have already gone out the door,” Toomey said on the Senate floor Thursday. “The garnishment happens automatically. It’s already happened.”
Democratic co-sponsors Sen. Sheldon Brown and Sen. Ron Wyden attempted to introduce the legislation Thursday that would have made it illegal for private debt collectors to garnish the stimulus payments that came as part of the ARP, as well as add special coding to any new payments directly deposited to accounts so banks can identify them as not up for garnishment. The protections would not have applied to any stimulus payment made before the bill could become law.
Brown said he would “not stop fighting,” and would attempt to bring the bill before the Senate again. There is no timeline yet for when that might happen, according to Brown’s office, even as more stimulus payments continue to be sent out.
“While the bill cannot protect retroactive payments, it would have protected payments for the millions of Americans who have not received their stimulus payments,” a statement from Brown’s office said.
The second round of stimulus checks passed in December included similar protections against garnishment, such as the identifying coding on direct deposits sought by Brown and Wyden’s bill. These protections could not be included in the American Rescue Plan itself because Democrats used a procedural loophole called “budget reconciliation” to pass the ARP.
This also caught Toomey’s ire, who blamed Democrats for passing the ARP without support from a single Republican.
“Now our Democratic colleagues perceive a problem with this legislation and they’d like Republicans’ consent to fix what might have been resolved with some kind of compromise had they pursued the path that we pursued when we were in control,” Toomey said.
Toomey also said the bill would prevent those with a “valid legal claim” from getting money due to them, like a spouse seeking alimony from a “deadbeat former husband.”
Democrats accused the Republicans of merely playing obstruction, particularly because both parties supported the protective measures passed in December.
“The fact is, in December, just a few weeks ago, Republicans were supportive of families Sen. Brown and I are seeking to help today,” Wyden said on the Senate floor Thursday.
Affected consumers might not be totally out of luck, even as the political back-and-forth continues. The Consumer Financial Protection Bureau (CFPB) says it’s keeping a close eye on the issue, and has met with financial institutions to discuss potential options to protect consumers. Some financial institutions, for example, have said that they’d consider restoring stimulus funds seized by private debt collectors, according to a CFPB statement released Wednesday.