Editorial: Federal stimulus aim is to help the needy, not enrich the greedy

Posted April 21, 2020 5:00 a.m. EDT
Updated April 21, 2020 5:49 a.m. EDT

Debt collectors taking stimulus

CBC Editorial: Tuesday, April 21, 2020; Editorial #8532
The following is the opinion of Capitol Broadcasting Company.

Who should decide how the stimulus check that’s (we hope) arrived in your checking account?

There are lots of folks with lots of ideas. Most basically, the hope is that families in need will spend the $1,200 per adult on making sure, as far as it will go, the basics of life are taken care of – shelter, food and health. There’s plenty of advice for those who may be in a position to share some of their stimulus check with organizations that help those in need.

But some North Carolinians and others across the nation are discovering someone else has already decided what will happen to those stimulus funds – and grabbed them within seconds of the funds arriving in a bank account. Banks, lending institutions, debt collectors and others are making claim.

Consumer advocates, members of Congress who voted for the legislation and 25 state attorneys general – including North Carolina’s Josh Stein – say that’s wrong. They’re right. This is meant to help wage-earners live – not provide relief to big financial institutions, commercial lenders and debt collection agencies.

“Federal relief payments from the CARES Act were intended to help people who are struggling financially during the COVID-19 pandemic. That money must go to North Carolinians to use for housing, food and other urgent needs,” Stein said. He and his fellow attorneys general have written to U.S. Treasury Secretary Steven Mnuchin and asked his agency to move to assure that these funds are not intercepted and subject to garnishment.

The $3,400 a family of four might receive is critical. There’s a good chance that money has quickly dried up with breadwinners, through no fault of their own, out of work. Unemployment benefits may not have started yet. Living paycheck-to-paycheck just a few weeks ago was fine.  Now there’s a crisis.

Our federal, state and local officials need to act to make sure – while we’re in the middle of this crisis – no one is forced from their home, goes hungry or lacks needed health care for inability to pay.

Our state Supreme Court has acted appropriately with a temporary suspension of foreclosure and eviction proceedings.

The attorney general’s office has said it won’t impose collections on debts owed to the state while in the midst of the current state of emergency. “I want folks to focus on feeding their families,” Attorney General Stein said in an interview Monday. “They’ll still owe the money and we expect payment. It’s a matter of timing and now is not the time.”

Many businesses are stepping up. Utilities like Duke Energy have said they won’t suspend anyone’s service during the crisis for lack of payment. Gov. Roy Cooper’s also issued an executive order to prevent disconnection of electric, gas, water and wastewater services through May.

But there is more that must be done to protect families from financial ruin.

Federal and state officials must make unquestionably clear that debt collectors and other financial agencies cannot seize personal stimulus funds meant to keep people alive. The federal Department of Education must ease the burden of student loan payments. Credit reporting agencies cannot use incidents during this emergency to create adverse ratings. Federal officials need to be aggressive in letting those who lost insurance know they can go to the federal exchange and qualify for coverage.

State officials, legislators’ businesses and consumers need to work together to best support the financial security of families during this crisis AND help them avoid ruin when it is over. The state’s 1870 North Carolina wage garnishment law needs to be updated. After 150 years the law is due some modernization to make clear that debtors must also be able to support their families.

Further, lawmakers, lenders, landlords and others need to have policies and procedures in place so when the emergency subsides and temporary moratoriums are lifted, they are not followed by a tsunami of evictions and foreclosures in our courts. Rents shouldn't be increased for a set period, mortgage payments should be spread out, for example.

Patience not pressure, clear procedure not arbitrary seizure. Now is the time to provide a path helping consumers and creditors navigate our recovery so all North Carolinians have an opportunity for a return to normalcy and move ahead.

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