New garnishment law makes bank garnishment exemptions automatic
Updated: May 6, 2021
Washington State has passed House Bill 1525. This was signed into law on April 14, 2021 and has an effective date of July 25, 2021.
The stated purpose of the law is to reduce administrative burdens on businesses (here banks) and make claiming exemptions easier. To this end an automatic exemption amount has been created. In other words, there is a goalie at least partially protecting bank accounts now.
The law modifies RCW 6.15.010 (various personal property exemptions) to automatically protect certain amounts based on the judgment type:
$500 for general debts ($500 max exemption that may be claimed)
$1,000 for private student loan debts ($2,500 max exemption that may be claimed)
$1,000 for consumer debts ($2,500 max exemption that may be claimed)
Note that the debtor may still have additional exemption claims to make.
This simple law takes into account some practical considerations. First, some debtors do not want to make maximum exemption claims and instead prefer a debt to be resolved depending on the circumstances. Second, the exemption amount being automatic gives debtors some funds to hire counsel to explain the rest of the process and to possibly make some additional payments for essentials.
This law is a change to the existing framework. That framework effectively freezes all money in a judgment debtor's account (up to the amount owed on the judgment), and then puts the requirement of claiming the exemptions on the judgment debtor. The exemption claim form (and mailing envelopes) is provided, but it is not uncommon for a judgment debtor to not understand the process and ignore the claim form. That form must be provided within a set time period or any claims for exemption are waived. It is also not uncommon for judgment debtors to make claims past that deadline (21-28 days depending on the circumstances).
Additional legislative information and the text of the law can be found on the Washington State Legislature's website.
Law firms, collection agencies, and in-house attorneys will need to begin to use the modified writ of garnishment when the law goes into effect.