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Special Edition: State State Garnishment Guidance
Under the recently enacted
Coronavirus Aid, Relief and Economic Security Act (CARES Act, S.3548)
, Americans who meet certain income requirements will receive federal Economic Impact payments or stimulus checks, to assist them in coping with the COVID-19 pandemic. Due to the classification of the payments, they may be subject to seizure by creditors to cover unpaid debts.
In last Friday’s
NASCUS Report
, we provided an overview of orders and guidance shielding these funds from garnishment in
Connecticut, Illinois, Ohio, and Washington.
In this special edition of
StateFocus
,
we explore orders and guidance from the above and other states regarding the garnishment of stimulus payments.
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Connecticut
In Connecticut, Department of Banking Commissioner Jorge Perez issued
guidance
strongly urging state financial institutions not to use a stimulus payment to satisfy account overdrafts. Noting that the payments are to assist residents with basic necessities, the Commissioner encouraged institutions with systems that automatically applied a stimulus payment to an account overdraft, promptly reverse the application.
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District of Columbia
Under
D.C. Act 23-286
, creditors and debt collectors are prohibited from initiating, filing, or acting upon the garnishment, seizure, attachment, or withholding of wages, earnings, property, or funds for the payment of a debt during a public health emergency. The legislation was unanimously approved by the D.C. Council and signed by Mayor Muriel Bowser on April 10.
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Illinois
In Illinois, Governor J.B. Pritzker
announced
he is suspending laws that permit wage garnishment. The state Department of Financial and Professional Regulation also issued
best practices
to Illinois financial institutions recommending an array of steps institutions can take to assist borrowers, including deferring collection measures.
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The Massachusetts Attorney General Maura Healey Office released
guidance
asserting that under state law, all CARES Act funds provided to residents is “public assistance” and therefore exempt from garnishment. The guidance does permit the state to take actions to recoup past due child support payments, however.
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In a
statemen
t
, the Nebraska Attorney General Doug Peterson warned creditors, debt collectors and financial institutions that state law may exempt the Economic Impact payments from garnishment and that the AG’s office is “diligently monitoring and investigating consumer complaints related to COVID-19.”
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In New York,
guidance
from Attorney General Letitia James
states stimulus payments are exempt under New York law and that any person garnishing or attempting to garnish such payments has violated the law. The guidance also exempts the CARES Act payments from bank setoffs.
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Citing state law, Ohio Attorney General Dave Yost issued a
statement
asserting that stimulus payments are exempt from garnishment because the payments are “emergency support” to help Ohioans with basic needs.
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An
Executive Order
issued by Oregon Governor Kate Brown, prevents stimulus payments from being garnished by creditors. The order does not protect against garnishments due to criminal actions requiring restitution or civil judgments based on a criminal conviction.
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Washington Governor Jay Inslee issued a
proclamation
suspending garnishments, the collection of judgments for consumer debt and the accrual of post judgment interest judgments.
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StateFocus
is typically published on a monthly basis, however, due to the increased volume of state credit union guidance related to the COVID-19 pandemic, NASCUS will publish special editions as required.
We have also created a
page
on the NASCUS website to compile state wage garnishment guidance related to COVID-19.
Please submit any activity in your state to
Shelton Roulhac
for publication.
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StateFocus
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www.nascus.org
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