Now that the second round of stimulus checks have started to be distributed, the Attorney General of Virginia is touting a new law that went into effect in late October that will protect those funds from being garnished or seized as part of a judgment.
The new law, H.B. 5068, was signed by Gov. Ralph Northam, in late October. It was enacted after it was reported that the first round of stimulus payments were not protected by Congress from being garnished or seized. A number of states, including Colorado, Vermont, Minnesota, California, and Indiana took steps to protect stimulus funds from being garnished, even though there were no reported incidents of those funds being seized by collectors or judgment creditors.
In the event a judgment creditor attempts to seize funds from a bank account, the consumer must be notified and allowed to submit a claim for exemption form. That form now includes a entry — Emergency relief payments. When filing the claim for exemption form, the consumer may request a court hearing to decide the validity of the claim.
Emergency relief payments are defined under the law meaning “a 2020 recovery rebate for individuals and qualifying children provided pursuant to § 2201 of the federal Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) or any future federal payments or rebates provided directly to individuals for economic relief or stimulus due to the COVID-19 pandemic, not to exceed $1,200 per individual per payment or rebate, and not to exceed $500 for each qualifying child paid to the individual per payment or rebate.”
All emergency relief payments are automatically exempt from the creditor process, according to the law.
“After nine months of economic fallout from the COVID crisis, these payments are even more important than ever for thousands of Virginia families who are counting on this money to help them make ends meet for another few weeks,” said Attorney General Mark Herring, in a statement. “Though the payments would have been much larger if not for Republican obstruction, they nevertheless offer some much needed support. I’m glad we were able to identify this problem and enact a solution that will keep this badly needed assistance, and other assistance that may come in the future, from getting scooped up by debt collectors and creditors. People should come first in this crisis, not debt collectors.”
