- State Updates: Washington DC, Virginia
- Federal Stimulus Funds Guidance
- RMAI COVID-19 Resources
State Updates – Debt Collection Restrictions Extended, Emergency Relief Payments Exempted
Washington DC Extends Debt Collection Restrictions through May 30, 2021
On December 18, 2020, by Order of the Mayor of the District of Columbia, the District of Columbia’s public health emergency declaration was extended through March 31, 2021. As a result, the restrictions presently in effect on debt collection activity are effectively extended through March 31, 2021 plus 60 days or May 30, 2021.
Collection Restrictions: As a reminder, the District of Columbia requires collectors to cease all outbound written communications and calls to D.C. debtors, unless the communication is made in response to a request by the debtor (such as a consumer complaint or dispute that requires a response, or a required communication associated with a postdated payment arrangement that the consumer has requested, etc.). The restrictions prohibit the filing of new collections lawsuits in D.C. or threats to do so, and prohibit collectors from taking or threatening to take certain actions, including garnishment, repossession, in-person contact, etc.
Advisory to Residents: The Order includes an advisory, strongly recommending all residents of the District of Columbia limit their activities to essential activities and travel, including work, school, childcare, government services, medical needs, food, supplies, and exercise.
Non-essential Businesses Mandate: Finally, the Order requires all non-essential businesses to telework, except for staff needed to support minimum business operations.
Enforcement: Any individual or entity that knowingly violates this Order may be subject to civil and administrative penalties authorized by law, including sanctions or penalties for violating D.C. Official Code 7-2307, including civil fines or summary suspension or revocation of licenses.
So, what does this mean? Members who collect debt from residents of the District of Columbia must continue to suspend all debt collection activity including legal actions and remedies through May 31, 2021. The penalties for violating the prohibitions detailed in the Order, including collection activity, during this state of public health emergency are severe and include suspension of licenses.
As a practical matter, if you employ residents of the District of Columbia, members should be mindful of the fact, collection agencies and their employees are non-essential businesses and therefore required to telework except for those individuals needed to support basic, minimum functions to support your business operations.
Virginia Exempts Emergency Relief Payments Exempt from Creditor Process
On October 28, 2020, in a Special Session of the General Assembly of Virginia House, a bill exempting emergency relief payments from certain creditor processes was enacted into law. The purpose of the law was to amend the list of funds exempt from creditor actions such as garnishment and liens to include emergency relief payments. For further information, see § 8.01-512.4 of the Code of Virginia and new Chapter 3 of Title 34 numbered 34-28.3 relating to emergency relief payments.
Prior to the amendment, Virginia law prohibited the issuance or service of a summons in garnishment or the issuance or service of any notice of lien on a financial institution pursuant to § 8.01-502.1, unless a notice of exemptions and claim for exemption form was attached. The amendment simply amends the list of exempt funds to be included in the notice of exemptions and claim form to include emergency relief payments.
§ 34-28.3. Emergency relief payments exempt. For the purposes of this section, “emergency relief payment” means 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.
Pursuant to the amendment, all emergency relief payments paid to individuals shall be automatically exempt from the creditor process. However, the amendment also includes a very detailed process account holders may use to require a review of the funds by the financial institution in which their account is held to determine whether the funds include any emergency relief payment(s).
The exemption created by this act is in effect but does not extend to any garnishment process or other creditor process that concluded before the enactment of this act.
So, what does this mean? Members who seek to enforce payment obligations owed to creditors using the garnishment or lien process in Virginia must immediately amend the notice of exemptions and claim form to include emergency relief payments. Similarly, upon service of a garnishment or lien notice, financial institutions in Virginia, must immediately modify their processes to determine whether funds subject to the garnishment or lien may be exempt because they represent monies paid by the Federal government as emergency relief or stimulus due to the COVID-19 pandemic.
Federal Stimulus Funds Guidance
On December 29, 2020, the Internal Revenue Service and the Treasury Department began delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. RMAI again advises members to avoid seeking these funds as a potential source of payment on outstanding consumer obligations. Specifically, to the degree the federal stimulus funds are ascertainable, RMAI asks members to avoid soliciting those funds or otherwise attaching those funds for the purposes of satisfying a debt or money judgment. If a consumer wishes to use these funds for the payment of an obligation, that is acceptable, but should not be solicited.
RMAI COVID-19 Resources
Happy New Year and Best Wishes for 2021!
This alert is intended for members of the Receivables Management Association International and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.