April 21, 2020
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. 

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.
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.

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.
M assachusetts

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.

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.”

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. 

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. 

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.

Washington Governor Jay Inslee issued a proclamation suspending garnishments, the collection of judgments for consumer debt and the accrual of post judgment interest judgments.

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.
StateFocus | www.nascus.org