April 30, 2020:
- State Updates: Iowa, Minnesota, Illinois, Rhode Island
- Federal Stimulus Funds Guidance
- RMAI Commitment to Consumers and FAQs
State Updates: As States Extend State of Emergency Orders, Debt Collection Remains in Focus
On Friday April 24, 2020, Iowa Governor, Kim Reynolds issued an Order extending the State of Public Health Disaster Emergency in response to the ongoing state of the COVID 19 pandemic. Included in Reynolds’ proclamation is a moratorium on garnishments. Section 28 provides in pertinent part:
Pursuant to Iowa Code § 29C.6(6) and § 135.144(3), and in conjunction with the Iowa Department of Public Health, I hereby temporarily suspend the provisions of Iowa Code Chapter 642 authorizing garnishment and the provisions of Iowa Code Chapter 626 allowing execution of garnishment, except for those provisions relating to enforcement of domestic support orders.
By way of this Order, the restrictions placed on garnishment orders, other than domestic support orders, will remain in effect indefinitely. RMAI is working with Iowa state legislators to get clarification of the intent of the Order and the date it will expire. Click here to review the full text of the Order.
So, what does this mean? Members who collect judgments in Iowa should extend the restrictions they have placed on exercising post judgment remedies based on the Governor’s previous Order to ensure stimulus payments are not inadvertently seized for payment.
On March 25, 2020, Governor Tim Walz signed Executive Order 20-20 directing Minnesotans to Stay Home, establishing what businesses were considered part of the Critical Sector and determining what businesses were exempt from the Stay at Home Order. The Governor’s Order did not exempt debt collection and workers supporting debt collection from the stay at home requirement which meant the employees of debt collectors were prohibited from working at the location of the debt collection agency.
In response, and to clarify whether work from home debt collectors needed to be registered as individual branch offices of the collection agency they supported, the Minnesota Department of Commerce offered relief. The relief came in the form of a temporary exemption from the branch office licensing requirements during the term of the Stay at Home Order and so long as certain conditions were met.
On April 13, 2020, Governor Tim Walz signed Executive Order 20-35, extending the COVID-19 peacetime emergency directing Minnesotans to Stay Home. Again, to alleviate confusion whether the exemption for branch office licensing would also be extended during the new Stay Home Order, the Department offered clarification. On Friday April 24, 2020, the Minnesota Department of Commerce, issued a declaration extending the exemption from branch office licensing for work at home agents during the state’s COVID-19 peacetime state of emergency. Click here to review the terms of the full text of the declaration.
So, what does this mean? It means it is business as usual in Minnesota until the state of emergency ends and further information about the state licensing exemption for work at home agents is provided. There is no immediate need to register agents who work from home as a branch office.
On March 17, the Governor of Illinois, JB Pritzker, declared the entire state a disaster area. This Order further required all individuals living in the state to stay at home and suspended a number of post judgment collection actions, including:
- service of garnishment summonses;
- wage deduction summonses;
- citations to discover assets (“supplemental proceedings”) on consumer debtors or consumer garnishees, and
- the continuance or curtailment of non-essential court matters, including supplemental proceedings
The Governor’s Order prompted numerous questions about the restrictions and created procedural questions left unanswered by the Order. On April 24, 2020, the Supreme Court of Illinois, issued an Order to further clarify and define the restrictions and limitations on post judgment remedies by the Governor’s March Order and the rights and duties of the parties to a post judgement action. Click here to review the Order in detail.
So, what does this mean? Members who use any of the post judgment remedies listed in the Governor’s Order should carefully review the information offered by the Illinois Supreme Court to avoid delays, denials and court challenges.
On April 28, 2020, the Attorney General of Rhode Island, Peter F. Neronha, issued general guidance to financial institutions, creditors and debt collectors in regard to payments exempt from seizure. The purpose of the guidance is to make clear that in addition to other funds protected from seizure under Rhode Island law, stimulus payments to Rhode Island residents by the Federal government pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) should be similarly protected. To that end, the Attorney General made clear:
It is the Attorney General’s opinion that, under Rhode Island law, all CARES Act recovery (“rebate”) payments provided to Rhode Islanders under Section 2201 of Title Il of the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 are exempt from attachment and execution. R.I.G.L. 9-26-4(10); Section 2201 of Title Il of the CARES Act. This Guidance addresses only the exemption of payments made pursuant to Section 2201 of Title Il of the CARES Act. This Guidance does not express an opinion on any other exemptions or the status of the CARES Act payments in other contexts.
Should a creditor seek to attach a CARES Act recovery rebate from a citizen of Rhode Island, in addition to any cause of action that may be brought by debtor, the Attorney General’s Office may bring a civil action or seek injunctive relief against a creditor in order to protect Rhode Islanders from unlawful action. Click here to review the attorney general’s order.
Federal Stimulus Funds Guidance
On April 13th RMAI advised members to avoid seeking COVID-19 federal stimulus funds as a potential source of payment on outstanding consumer obligations
Specifically, to the degree the federal stimulus funds are ascertainable, RMAI asked 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 federal stimulus funds for the payment of an obligation, that is acceptable, but members should not solicit those funds.
So, what does this mean? If you collect in a state that has not issued an executive order protecting federal stimulus funds, RMAI recommends that you adopt a policy for not soliciting or attaching those funds.
Click here to read the complete April 13th Member Alert with Updated COVID-19 Guidance to RMAI Members.
RMAI Commitment to Consumers and FAQs
On April 23, RMAI finalized its COVID-19 Commitment to Consumers and FAQs. The communication is posted on the COVID-19 resource page as well as on the Consumers page of the RMAI website.
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.