The $1,400 check will soon be in the mail, but it might not end up in your pocket.
Consumer advocacy groups are raising concerns that unlike the most recent round of coronavirus relief, courts or banks can swoop in and use the direct payments in President Biden’s $1.9 trillion package to settle recipients’ outstanding debts.
“These stimulus payments are intended to help families stay above water, to help them pay for food and other necessities,” said Christine Hines, legislative director at the National Association of Consumer Advocates. “Not for obscure and sometimes disputed debt.”
The warning came as House Democrats prepared to pass the package on Wednesday, handing a major early legislative victory to Mr. Biden over Republican complaints that the bill is too expensive and isn’t properly targeted.
In the $900 billion relief bill that was signed into law by former President Trump in December, Congress included specific language protecting the direct payments of up to $600 from garnishment.
But this time around, lawmakers were hamstrung by the fast-track budget process Democrats are using to get the package to Mr. Biden’s desk without Republican support, Ms. Hines said.
Senate Finance Committee Chairman Ron Wyden, Oregon Democrat, said Tuesday that he plans to introduce standalone legislation to shield the payments from private debt collectors.
“Last year, Democrats and Republicans joined together to shield relief payments, and I would hope that Senate Republicans again support ensuring families receive the $1,400 they need to pay rent and buy groceries,” Mr. Wyden said.
He said Senate rules did not allow Democrats to include the language in the package.
Anti-garnishment provisions in coronavirus relief packages have had strong, bipartisan support in Congress since the start of the pandemic, said Ed Mierzwinski with U.S. PIRG, a coalition of public interest research groups.
“It continues to have strong support from both the nation’s leading bank trade associations and the leading consumer groups,” said Mr. Mierzwinski, senior director of the group’s federal consumer program. “Unfortunately, the devil is in the details.”
Ms. Hines’ and Mr. Mierzwinski’s groups joined with more than a dozen other banking and consumer organizations to press congressional leaders to pass standalone legislation to protect the direct payments from debt collectors.
“Allowing economic impact payments to be garnished could impose significant burdens on some families, especially those in communities of color, facing unprecedented circumstances,” the groups said in the letter released on Tuesday.
They want Congress to treat the payments as “benefits” subject to federal exemptions from garnishment, saying even sympathetic debt collectors can’t flout the law.
“Banks are obligated to comply with court orders, so they can’t be blamed for this,” Ms. Hines said. “This has to be an act of Congress to protect these federal benefits from garnishment.”
Last year, some governors, including California Gov. Gavin Newsom, a Democrat, and Maryland Gov. Larry Hogan, a Republican, took action on their own to prevent garnishments of the original direct payments of up to $1,200 per person in the $2.2 trillion relief package that Congress passed last March.
The Senate, then controlled by Republicans, unanimously passed legislation in July to bar private debt collectors from garnishing stimulus payments.
It looks as if it will take similar standalone legislation to protect the latest round of $1,400 checks, which would be doled out to individuals making up to $75,000 per year and couples making up to $150,000 per year.
The House cleared an initial procedural hurdle on the broader $1.9 trillion package on Tuesday after the Senate signed off on its own version over the weekend.
Final House passage of the bill is expected on Wednesday, though Democratic leaders took a victory lap ahead of time.
“I’m so excited — I just can’t hide it,” said House Speaker Nancy Pelosi, California Democrat.
The package also includes $350 billion for states and localities and $170 billion for K-12 schools and colleges, among other items.
Congressional Republicans dismissed the plan as a costly boondoggle, saying Democrats packed it with items unrelated to the pandemic and that much of the money, such as for reopening schools, won’t go out the door before October.
“We could have had a bill that was a fraction of the cost of this one that could have gotten bipartisan approval and support,” said House GOP Conference Chair Liz Cheney, Wyoming Republican. “But the speaker decided to go in another direction.”
The White House said people can expect to see payments hitting their bank accounts this month.
“Treasury and IRS are working tirelessly to make that happen,” said White House press secretary Jen Psaki.
The IRS will use income levels from people’s 2020 tax returns to determine eligibility if they have filed already and will look to their 2019 returns if they haven’t filed yet.
Treasury will send money electronically to households that provide banking direct deposit information and will ship out paper checks or debit cards to others.
Mr. Biden’s name will not appear on the direct checks, a departure from the initial $1,200 payments last March that featured Mr. Trump’s name.
“This is not about [Biden] — this is about the American people getting relief,” Ms. Psaki said.
Lawmakers said the checks could hit Americans’ bank accounts within “days” after Mr. Biden signs the package into law, but those who didn’t file their taxes last year or who don’t file electronically might have to wait a bit longer.
“If you’re in a category where you were not an electronic filer or you didn’t file last year, then you may have to proactively file for this,” said Sen. Chris Van Hollen, Maryland Democrat.
“But the reality is most people will get their payments automatically — electronically deposited or through the mail.”
• David Sherfinski can be reached at dsherfinski@washingtontimes.com.
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