Third Stimulus Checks Can Be Seized By Debt Collectors After GOP Senator Blocks Protection Bill

Private debt collectors could now seize the $1,400 stimulus checks being sent to Americans after Republicans blocked legislation that would prevent it.

On Thursday, Sen. Pat Toomey, R-Pa., blocked the Senate from voting on the bill and insisted debt collectors had a “valid legal claim” to garnish the $1,400 payments. He also blamed Democrats for passing a bill that lacked the protections.

“Now our Democratic colleagues perceive a problem with this legislation and they'd like Republicans' consent to fix what might have been resolved with some kind of compromise,” Toomey said from the floor.

“My colleagues want to come here and block a valid legal claim from being honored. At best this is now a political statement because, as one of my colleagues just alluded to, these payments have already gone out the door,” he added.

By law, a person's bank would turn over the stimulus money to debt collection companies if the recipient has a court judgment against them for outstanding bills, including unpaid medical bills and credit card debt.

Democrats, led by Sens. Ron Wyden, D-Ore., and Sherrod Brown, D-Ohio, introduced a new amendment to the coronavirus relief package on Wednesday that would prevent debt collection companies from taking a cut from the payment.

“Now Senator Brown and I wanted to include these protections in the American Rescue Plan. We wanted to include them just like was done in the December relief bill. But the problem was Senate rules don't allow Senator Brown and I to include these protections in the American Rescue Plan," Wyden said from the Senate floor.

It is not clear whether Democrats plan to pass the bill despite Toomey’s objection. They would need 10 Republicans to vote in favor of the legislation to be able to prevent debt collectors from garnishing the $1,400 payments.

“We will keep trying,” Brown told HuffPost.

Lawmakers had previously failed to prevent debt collectors from taking a cut from the first round of checks worth $1,200 from the Coronavirus Aid, Relief and Economic Stability Act (CARES) a year ago.

However, Republicans sided with Democrats in the passing of measure that blocked debt collectors from seizing the second round of the $600 stimulus payment that was part of the relief bill that passed in December 2020.

Democratic lawmakers were unable to include the protections in the American Rescue Plan, as it was not covered by the budget reconciliation process.