20 JULY / AUGUST 2020 COMPLIANCE CONNECTION Garnishing Wages Current status post-crisis Question: My bank suspended all garnishments and foreclosures in early March in response to the COVID-19 crisis. Now that customers are starting to go back to work, are we allowed to recommence these actions against defaulted borrowers? Answer: While garnishments may be filed, foreclosures may not. Garnishments. As a result of an emergency rulemaking by the Indiana Supreme Court (the “Court”), the filing of a garnishment action is not without some risk if the borrower has received stimulus funds from The Coronavirus Aid, Relief and Economic Security Act, S. 3548 (CARES Act), signed by the president on March 27. On April 20, the Court ordered that all Indiana trial courts “shall issue no new orders placing a hold on, attaching, or garnishing funds in a judgment-debtor’s account in a depository institution as defined in the Depository Financial Institutions Adverse Claims Act, I.C. § 28-9-1-1, et seq., if those funds are attributable to a stimulus payment, except that this prohibition shall not apply to judgments or orders for payment of child support,” and “[a]s for any previously issued court orders placing a hold on a judgment-debtor’s account in a depository institution, the judgment-debtor shall be entitled, upon request, to a hearing (either in-person or remotely, as local circumstances permit), within two business days of the court’s receipt of said request, to determine what funds in the account are attributable to a stimulus payment and for the judgment-debtor to assert any exemption(s) under state or federal law,” with the Court further directing that trial courts “shall treat such hearings as ‘essential’ and ‘urgent’ under this Court’s [prior emergency] orders of March 16 and 23, 2020” (emphasis in original). The Court’s April 20, 2020, order provided that the order would remain in effect “[u]ntil expiration of the COVID-19 public health emergency as declared by Governor Holcomb, or until this Court may earlier order.” By its May 29 Order Extending Trial Courts’ Emergency Tolling Authority and Setting Expiration of Other Emergency Orders, the Court ordered that “notwithstanding any contrary provision of any previous order granting local or statewide relief under [its emergency rulemaking authority] … [u]nless further extended by order of this Court, the orders issued in … this case, regarding attachment and garnishment of CARES Act stimulus funds … shall expire at 12:01 a.m. on January 1, 2021.” In light of the Court’s orders, unless you can be sure that the funds you are seeking to garnish are not stimulus funds, you should be extremely cautious in pursuing any new garnishments until the Court’s orders expire on Jan. 1. Further, even existing garnishments will be subject to heightened scrutiny until the Court’s order expires. Foreclosures. Foreclosure actions involving residential real estate or property still are not permitted pursuant to Gov. Eric Holcomb’s March 18 Executive Order 20-06 (the “Executive Order”).* The Executive Order is in effect until such time as the governor’s larger Executive Order 20-02 (“EO 20-02”) with respect to the COVID-19 crisis expires. EO 20-02 was renewed by the governor on June 3, and is now set to expire July 4, 2020, unless further extended. HB Brett J. Ashton Partner Krieg DeVault LLP bashton@kdlegal.com Krieg DeVault LLP is a Diamond Associate Member of the Indiana Bankers Association. This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation. *in.gov/gov/files/EO_20-06.pdf
RkJQdWJsaXNoZXIy MTg3NDExNQ==