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Attorney General Josh Stein Urges Federal Government to Ensure Emergency Stimulus Payments Don’t Go to Debt Collectors

For Immediate Release:
Monday, April 13, 2020

(RALEIGH) Attorney General Josh Stein today called on the U.S. Department of the Treasury to take immediate action to ensure billions of dollars in emergency stimulus payments authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) go to American families, not debt collectors. The CARES Act, which was passed three weeks ago, does not explicitly designate these emergency stimulus payments as exempt from garnishment from creditors.

“Federal relief payments from the CARES Act were intended to help people who are struggling financially during the COVID-19 pandemic,” said Attorney General Josh Stein. “That money must go to North Carolinians to use for housing, food, and other urgent needs. I urge Secretary Mnuchin to act quickly to protect these funds.”

The CARES Act authorizes the Treasury Department to issue emergency stimulus payments of up to $1,200 for eligible adults and up to $500 for eligible children. Similar government relief programs intended to provide for Americans’ basic needs — like Social Security, disability, and veterans’ payments — all are statutorily exempt from garnishment. Garnishment is a legal mechanism that typically involves the “freezing” of funds in a bank account by creditors or debt collectors. In what was a likely oversight by Congress to quickly pass the law, the CARES Act does not explicitly designate these emergency stimulus payments as exempt from garnishment, allowing debt collectors to potentially benefit before consumers.

In a letter to Treasury Secretary Steven Mnuchin, the coalition asks the agency to protect CARES Act funds, like other government relief programs, and ensure funds go where they were originally intended. The attorneys general urge Secretary Mnuchin to use his authority to stave off economic uncertainty for millions by immediately issuing regulation or guidance explicitly designating CARES Act “benefit payments” as funds that are exempt from garnishment.

In their letter, the attorneys general state that, “During this public health and economic crisis, the States do not believe that the billions of dollars appropriated by Congress to help keep hard-working Americans afloat should be subject to garnishment. Treasury has stated that ‘[i]n the weeks immediately after the passage of the CARES Act, Americans will see fast and direct relief in the form of Economic Impact Payments,’ and we request Treasury’s assistance in ensuring Americans are able to retain that monetary relief.”

Attorney General Stein is joined in sending today’s letter by the Attorneys General of California, Colorado, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as the Hawaii Office of Consumer Protection.

A copy of the letter is available here.

More on Attorney General Stein’s work to protect North Carolinians during the COVID-19 pandemic:

Contact:
Laura Brewer (919) 716-6484

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