A consortium of 19 consumer and financial industry organizations, including The Clearing House (TCH), has asked Congress to protect the next round of stimulus payments from garnishment. The payments, which may be sent out as soon as the end of this month, can total as much as $1,400 per individual and are part of the American Rescue Plan Act of 2021 (ARPA), which is currently making its way toward final approval in the House before ending up on the president’s desk for his signature.
In a letter sent to Congress on Monday (March 8), the consortium argues that garnishment of these payments to pay past due child support can ultimately harm the individuals they were meant to help. Unlike the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which banned garnishments from affecting the $600 payments that went out, the ARPA contains no such protections. In fact, because the bill is being passed through the reconciliation process and the Byrd rule, it cannot be amended at this point to eliminate the garnishment stipulation. As a result, the group is asking for stand-alone legislation that would count the payments as “benefits,” which are exempt from garnishment.
“We believe it is imperative that Congress ensure that these next stimulus payments are treated as ‘benefits’ subject to the federal exemption from garnishment,” the group said. “Otherwise, the families that most need this money — those struggling with debt and whose entire bank accounts may be frozen by garnishment orders — will not be able to access their funds. This group includes very low-income families with children, people who have been disconnected from work opportunities for a long period, and many low-income adults now raising children in their homes.”
Not everyone believes eliminating the garnishment provisions for child support payments is a good thing, though.
“The stimulus I know was supposed to help individuals during this time, but you have to think about that mother that didn’t have help throughout the years,” Attorney Williams Jones told Memphis CBS affiliate WREG. Jones regularly works with parents struggling to receive their child support money. “I am actually kind of disappointed that they carved it out that we can’t garnish from the second and possibly the third check,” he added. “I think it was good for single moms and single dads who are trying to raise kids alone.”
However, the ARPA legislation does provide additional $1,400 payments for dependent children, so it may offer a way to let both parents in a child-support situation receive the benefits of the distributions.
The letter was addressed to both the majority and minority leaders of both houses of Congress and included the support of both The Clearing House and Nacha, two organizations involved with ACH transactions and real-time payments that would perhaps have a stake in payments moving from government coffers to individual bank accounts. Among the signatories are consumer advocacy groups including Americans for Financial Reform, the Center for Responsible Lending, Consumer Reports and Public Citizens. Banking industry signatories include the American Bankers Association, the National Bankers Association and the Bank Policy Institute.
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