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Ahead of more EIPs, NAFCU reiterates need for garnishment protection
Following Senate passage over the weekend, the House today is poised to pass the next round of coronavirus relief and send the legislation – the American Rescue Plan Act – to President Joe Biden. As the package includes another round of economic impact payments (EIPs), NAFCU again joined with several other financial institution and consumer groups calling on Congress to protect the EIPs from garnishment.
The groups last month asked Congress to re-insert the garnishment language from the Consolidated Appropriations Act into the American Rescue Plan Act "to ensure that American families will receive these benefits as intended to fulfill our common goal of protecting these payments from garnishment within the practical realities of existing financial institution systems." Without such language, depository institutions are obligated to comply with court orders and pay creditors who attempt to garnish and freeze bank accounts.
In a letter sent Monday, the groups acknowledged that, because this next round of coronavirus relief is being advanced via budget reconciliation, there are limitations to include the garnishment exemption.
"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 groups wrote. "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.
"For these reasons, we urge Congress to quickly pass standalone legislation addressing garnishment to ensure that American families will receive these benefits as intended to fulfill our common goal of protecting these payments from garnishment within the practical realities of existing financial institution systems," they concluded.
NAFCU and industry trade groups have also asked for additional clarity regarding processing electronic and paper check transactions to ensure credit unions and other financial institutions have the resources and guidance needed to efficiently get funds to consumers. The association will continue to advocate for provisions that allow credit unions to effectively get these funds to members.