On , President Biden signed into law the Western Help save Package Act (ARPA). This legislation has a number of provisions of importance to consumers and consumer attorneys. This article focuses on the Act’s implications for the practice of consumer law.
The American Rescue Plan Act (ARPA) provides for $1400 per individual in stimulus payments for the majority of Americans. Find ARPA § 9601.
The December 27 legislation provided that stimulus payments (typically $600 per individual) under that legislation would not be reduced to offset federal debts or to pay state child support enforcement orders and cannot be garnished by judgment creditors. The December 27 payments were coded in a way that banks can recognize them and automatically protect them if they receive a bank account garnishment order. See Public Law Zero. 116-260, Consolidated Appropriations Act of 2021, div. N § 272.
Because ARPA was passed through budget reconciliation, ARPA does not contain these protections (other than protection against offset for child support), so that ARPA stimulus payments are vulnerable to garnishment in a way quite similar to the vulnerability of the typically $1200 stimulus payments pursuant to the , CARES Act. As such, reference should be made to an earlier blog post getting pointers on preventing garnishment and set off of CARES Act payments. Nevertheless, many of the emergency state protections listed in that article have now expired.
A bill has been introduced to provide similar protections from garnishment for ARPA payments as the Sandusky payday loans provided for in the , Societal Law Zero. 116-260. Be alert to new legislation that might offer these protections for ARPA payments.
Delaware restrictions family savings garnishments, and Ca, Massachusetts, and you may Nyc manage a particular dollars count when you look at the a bank membership because the automatically exempt off garnishment. In other says, after a bank checking account was frozen pursuant to help you an effective garnishment acquisition, the user would need to boost applicable exemptions, often for fund during the a bank checking account or a more general “insane cards” exception to this rule. For more details, see:
Exemptions applicable to “public benefit payments” in at least some states have been treated as applicable to federal stimulus payments. In addition, some state emergency COVID-19 orders issued in the spring or summer of 2020 may still be in place, preventing bank account garnishment. A current tracker of these state actions is found here.
If a buyers believes that customer’s family savings will in all probability end up being subject to good garnishment order to repay a courtroom wisdom, await if the stimuli percentage is actually privately placed for the family savings, and you can flow the cash out from the membership once you can easily, instance by paying off outstanding high-priority debts (age.grams., rent, mortgage loans, otherwise vehicles costs), to order expected activities (elizabeth.grams., food), otherwise withdrawing the percentage into the dollars. An alternative choice you to definitely decreases however, cannot eliminate the chance of garnishment would be to circulate funds from a checking account to an excellent prepaid credit card or a different checking account in the a smaller lender otherwise credit relationship. Prepaid cards and/or the account is susceptible to garnishment, however they are less inclined to get on creditors’ radar windows.
When a consumer’s Social Security, SSI, or VA benefits are direct deposited into a bank account or a Direct Express card, a dollar value equal to two months’ worth of those deposits is protected from garnishment, even if the amount in the account is traceable to the stimulus payment instead of to those federal benefits. See 31 C.F.R. § 212; NCLC’s Range Tips § 14.5.4. Such an account is thus fully protected from garnishment if the account balance is kept below an amount where deposit of the stimulus payment will still keep the balance under two months’ worth of the federal benefits.
