The Impacts of SB 5173 on Debt Collection: Writs of Execution edition
The Washington State legislature recently passed a new law, SB 5173, with far-reaching implications for creditors. The governor signed it on May 9, 2023. The law focuses on
property exemptions from enforcement actions such as execution, attachment, and garnishment. The largest implications concern bankruptcy, but the focus of this article is the changes for writs of execution against personal property.
As a reminder, writs of execution against personal property is one of the avenues for enforcement of existing judgments. The basic goal of a writ of execution against personal property is for the sheriff to seize property of a judgment debtor to be subsequently sold.
Also recall that exemptions mean "cannot touch." There are methods of claiming exemptions that sometimes can be waived, but when planning for how to enforce a judgment we always assume that debtors will act reasonably and take the best options available to them.
What did not change with SB 5173?
The bill expands and clarifies the scope and value of personal property that can be exempt from collection actions. These remain unchanged:
Clothing (not furs or jewelry) up to $3,500 for an individual.
All private "libraries" including electronic entertainment (e.g. the Playstation and Xbox) up to $3,500.
A cell phone, personal computer, and printer (no specific limit).
What changes did SB 5173 make to writs of execution exemptions?
Some of the historically individual limits were clarified to now be claimable by both spouses. That means that the below are effectively doubled for a married couple:
All household goods, appliances, furniture, and home and yard equipment not to exceed $6,500 for the individual.
Other personal property, excluding personal savings, up to $10,000 in value in a bankruptcy case, and up to $3,000 in value in other cases.
A motor vehicle up to $15,000 in aggregate value.
The tools, instruments, materials, and supplies used to carry on their trade up to $15,000 in value.
Notably, the law has also adjusted the rules around worker's compensation payments. Such payments are explicitly exempt from being assigned, charged, taken in execution, attached, or garnished. Importantly, this exemption now remains even after the issuance of the payments.
Putting it all together and final thoughts
Writs of execution against personal property are almost universally a terrible method of enforcing a judgment. The auction price for someone's used refrigerator is terrible. Even motor vehicles are a deep discount item because no one wants to buy a high dollar item with an ironclad no refund policy.
Personal property that is worth seizing is, by and large, unchanged by the law. Businesses do not receive protections, and high value items (e.g. exotic sports cars) are worth selling even if they are heavily discounted.
Judgment enforcement law and, especially, practice can be complex, and its application will vary depending on individual circumstances. We recommend that creditors seek legal advice to fully understand the implications of SB 5173 on their operations and strategies. More specifically we recommend that creditors reach out to the us, the Garnishment Gurus!