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AG Nessel Urges Federal Government to Exempt Emergency Stimulus Payments from Garnishment

LANSING – Michigan Attorney General Dana Nessel as part of a bipartisan coalition of attorneys general 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 and not debt collectors.

Congress passed the CARES Act three weeks ago to provide direct and immediate economic relief to all individuals and businesses affected by the coronavirus disease 2019 (COVID-19) public health crisis, but — unlike other government programs — the CARES Act does not explicitly designate these emergency stimulus payments as exempt from garnishment from creditors.

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 the payments goes to where they’re intended.

"Families across this nation are depending on these stimulus payments to keep a roof over their heads and to put food on their tables. If action is not taken to ensure this money is delivered to the people who need it, the sole purpose of the CARES Act will be defeated,” said Nessel. “My colleagues and I implore the federal government to ensure these payments are exempt from garnishment.”

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 — are all statutorily exempt from garnishment, a legal mechanism that typically involves “freezing” 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 their letter, the attorneys general urge Secretary Mnuchin to use his authority under the CARES Act to ease any economic uncertainty for millions by immediately issuing regulation or guidance explicitly designating CARES Act “benefit payments” as funds that are exempt from garnishment.

“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,” the attorneys general write. “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.”

Nessel joins the attorneys general of California, Colorado, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin along with the Hawaii Office of Consumer Protection in signing this letter.

A copy of the letter is available here.