On July 23, 2020, the Senate unanimously passed S. 3841. This bill protects stimulus funds provided under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) from being garnished by private debt collectors. This protection is similar to how Social Security payments are barred from garnishment. S. 3841 was first introduced by a bipartisan group of Senators – Chuck Grassley (R-IA), Sherrod Brown (D-OH), Ron Wyden (D-OR), and Tim Scott (R-SC).
Congress passed the CARES Act in March of 2020. While the CARES Act allows Congress to provide stimulus checks to many struggling Americans, it does not protect these payments from being garnished by private debt collectors. As part of S. 3841, for electronic payments of CARES Act stimulus checks, the Treasury Department will encode payments so that banks can protect them from being garnished by debt collectors. For non-electronic payments, S. 3841 allows individuals to request that their financial institution protect these payments from debt collection garnishment. If the language in S. 3841 becomes law, it would amend the CARES Act and potentially apply retroactively to past payments.
Under Congressional rules, because S. 3841 is a tax bill, it cannot be sent to the House of Representatives. However, Senators supporting S. 3841 are urging the House to pass a replica of the Senate bill. “The House must immediately take up this bill and ensure that the money allocated to working families by Congress goes to pay for food, medicine, and other necessities, not to debt collectors,” said Sen. Sherrod Brown [D-Ohio], one of the sponsors for S. 3841.
Troutman Pepper will provide updates on future movements regarding S. 3841 and other proposed amendments to the CARES Act.