The governor of California yesterday signed an executive order protecting the stimulus money individuals are receiving under the Coronavirus Aid, Relief, and Economic Security (CARES) Act from certain debt collection activities.
The order, a copy of which can be accessed by clicking here, prohibits anyone from seizing funds received under the CARES Act from any garnishment, attachment, or levy.
“Californians are reeling from the financial impact of COVID-19, the recently unemployed and those with student loan debt are among the hardest hit,” said Gov. Gavin Newsom. “The last thing they deserve is to see more money withheld as they try to put food on the table and pay their rent or mortgage.”
The governor announced that any funds which have already been garnished from a stimulus payment will need to be refunded back to the individual’s account from where it was taken. Certain debts, such as child support, spousal support, or restitution for victims of crimes, are exempt from the garnishment prohibition.
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, California, Oregon, Indiana, Illinois, Washington, Vermont, 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. 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 legislature is also considering bills aimed at prohibiting certain types of debt collection activities.
A number of states have also come together and worked out a deal with a number of private student loan servicers to offer relief
