A state court judge in Arizona has denied a challenge from the accounts receivable management industry that sought to keep the Arizona Protection from Predatory Debt Collection Act — a measure that increases the amount that can be shielded from garnishments to pay medical debts while also lowering judgment interest rates — from going into effect. The group, led by the Arizona Creditors Bar Association has said it will appeal the decision.
The law — which was supposed to go into effect December 5, but was stayed pending the outcome of the case — went into effect when the judge rejected the argument that the language of the statute is not unconstitutionally vague.
The newly enacted law is expected to eliminate up to 70% of garnishments in the state. It raises the homestead exemption to $400,000 from $150,000, bans garnishing the wages of anyone earning less than $50,000 per year — with annual increases, and raises the exemption threshold in bank accounts to $5,000 from $300. Judgment interest rates on unpaid medical debts will be capped at 3%.
The arguments made by the industry were not strong enough, according to Maricopa County Superior Court Judge John Blanchard.
“While the scope of the law is wide-ranging and impacts important and long-standing processes for collecting debts, the language at issue is neither vague nor unintelligible,” he wrote in his ruling. “In the court’s view, plaintiffs’ arguments are more akin to reasons why Arizona voters should reject the initiative. That time, however, has passed. The voters approved Prop 209.”
The plaintiffs argued that language in the statute made it unclear whether the law applied to new debts incurred after the law went into effect or any debt, regardless of whether it was incurred. Judge Blanchard said it’s not his job to re-write a statute and that uncertainty and confusion are “to be expected.”
