Garnishments suspended until May 27, 2020
Updated: May 23, 2020
Governor Inslee has issued proclamation 40-49 suspending certain garnishments and interests for consumer debt. Subsequent extensions have extended it to the current (as of May 22, 2020) date of May 28, 2020 (the first day a garnishment may resume).
On April 14, 2020 Washington State's governor issued a proclamation regarding garnishments (read it here). The press release, from the Governor's site, describes it as:
The proclamation suspends statutes that permit collection of consumer debt judgments, including bank account and wage garnishments and waives accrual of post-judgment interest on consumer debt judgments during the period of this order. This order is designed to protect consumer assets, including federal stimulus checks, from consumer debt collections.
What happens with garnishments?
The full text of the proclamation contains a confusing reference to the following provisions being "waived and suspended in their entirety:"
RCW 6.27.020(1) and (2)
RCW 6.27.080(2) and (3)
RCW 6.27.110(1) and (2)
RCW 6.27.130(1) and (3)
RCW 4.56.110(1) and (5)
The Governor's proclamation is obviously concerned with consumer debt. It states "I hereby prohibit the waivers and suspensions listed above from being applied to any judgment creditor, directly or through others acting on their behalf, except for the garnishment of wages and other income to collect judgments for consumer debt." Non-consumer debt is therefore not apparently subject to the proclamation.
Consumer debt is defined at:
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt includes medical debt.
This definition of consumer debt applies to many of the expected traditional debts such as credit cards, dental bills, automobile loans, home loans, etc.
What happened to interest?
"Accrual of post-judgment interest" on consumer debt is similarly prohibited until May 15, 2020.
The limitation on post-judgment interest is important. It means that interest will continue to accrue on debts where there is not a judgment (e.g. consumer loans that are in active repayment or have not been the subject of a court proceeding where the judgment creditor was already awarded a judgment by the court).
Whether a particular consumer creditor will agree to forgive or suspend interest on an unaffected loan will mostly depend on the agreement between the consumer and the creditor at this time.
In practice, what has this meant?
In practice, many Courts in Washington have either expressly or implicitly treated the prohibition as being universal or, when combined with other restrictions, effectively halted writs of garnishment.
Consumer Debt will not be collected on until May 15th. Interest will not accrue during this period either.
Whether presently applicable writs of garnishment are to be discharged is not clear. Funds held prior to the proclamation similarly are unclear, but presumably will not be released. However, further earnings after the effective date (and prior to the expiration date) of the proclamation should be disbursed to the consumer judgment debtor.
Creditors, especially those to whom the Fair Debt Collection Practices Act applies, should will, for the foreseeable future, need to be extra careful not to "attempt to collect" on an incorrect debt amount by failing to properly account for this period of frozen interest. Consumers, by contrast, should carefully examine any collection efforts occurring while this proclamation is active, and to explore potential oversteps by creditors in the future.