In a July 13 opinion piece in Credit Union Journal, the National Credit Union Administration Board member Todd Harper criticized those credit unions that had garnished members economic impact payments.
While the CARES Act exempted these stimulus payments from being offset for debts owed to federal and state agencies (except for child support), it did not protect these payments from garnishment or the right of offset.
Harper wrote that these payments were meant to cover daily living expenses of credit union members, who had been impacted by COVID-19.
Credit unions that garnished these payments faced potential damage to their reputation and potentially their business model.
He also pointed out that these credit unions could damage the image of the whole industry.
In related news, the Senate voted unanimously on July 23 to pass a bill (S. 3841) that would exempt the CARES Act economic impact payments from assignment or garnishment.
The legislation must still be passed by the House and signed into law in order to protect these payments from garnishment.
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