The Indiana Supreme Court yesterday ruled in an emergency order that funds deposited into the bank accounts of individuals from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) are to be exempted from new garnishments, and individuals with existing garnishments are entitled to an urgent hearing to give the Court the chance to determine from where the funds originated.
A copy of the ruling, following a petition that was filed by Indiana Legal Services, Prosperity Indiana, Neighborhood Christian Legal Clinic, and Indiana Institute for Working Families, can be accessed by clicking here.
Indiana is joining a number of states aiming to protect the economic stimulus funds from being garnished as a result of new or pre-existing judgments against individuals for previously unpaid debts.
In its ruling, the Indiana Supreme Court mentioned it received briefs from a number of creditors’ law firms, as well as the counsel for the International Association of Commercial Creditors. The Court also took into consideration a letter that was sent by a number of financial services trade associations to Congress, seeking to clarify that stimulus funds were to be exempt from garnishments.
“It is a relief that stimulus payments will be able to be used to meet urgent needs like housing, food, medicine, and utilities,” said Jessica Fraser, Director of Indiana Institute for Working Families, according to a published report. “We are grateful that the Indiana Supreme Court took this step. If Congress provides any future stimulus payments, it should ensure that these payments are clearly protected from bank account seizure by other creditors and debt collectors.”
A number of states have been actively issuing regulations, guidance, and emergency orders aimed at restricting what collectors can do during the coronavirus pandemic. Specifically related to the CARES Act payments, Oregon, Illinois, Washington, and Ohio have issued orders prohibiting that money from being seized by garnishment orders.
Wisconsin and Illinois have issued guidance aimed at providing advice to collectors about how they should be operating during the crisis. Massachusetts and Washington, D.C., have enacted emergency regulations that dramatically restrict how individuals can be contacted about their debts. North Carolina has enacted a 30-day deferral of debt payments. A bill in South Carolina called for a moratorium on medical debt collection. In Ohio, a bill was introduced that would halt all debt collection activities for the duration of the pandemic. The New Jersey
