Executive Order Suspends all Consumer Garnishments During COVID-19 Peacetime Emergency

  • May 27, 2020
  • COVID-19
  • Jeffrey J. Maleska

Minnesota Governor Tim Walz recently issued Executive Order 20-50, which in relevant part, suspends all existing consumer garnishment actions and prohibits new consumer garnishment actions from being commenced during the peacetime emergency declared in Executive Order 20-01. An exception is made, however,  for those actions that relate to domestic support obligations such as child support and spousal maintenance.

The peacetime emergency declared in Executive Order 20-01 is effective through June 12, 2020.

SUMMARY OF EXECUTIVE ORDER

Consumer Garnishments Are Suspended: Under Executive Order 20-50, creditors are prohibited from continuing and commencing garnishments actions involving “consumer debtors” and/or “consumer garnishees” until the peacetime emergency declared in Executive Order 20-01 is terminated.  In other words, Executive Order 20-50 disallows all garnishments – including both pre- and post-judgment garnishments – where the underlying debt “originated from the purchase of goods or services purchased primarily for a personal, family, or household purpose, and not for a commercial, agricultural, or business purpose.”

Demands for Disclosure are Suspended: Executive Order 20-50 also prohibits creditors from issuing Demands for Disclosures to consumer debtors.  Broadly, a Demand for Disclosure requires a debtor to complete a Financial Disclosure Form and disclose to a creditor what money and property the debtor possesses in order to assist in recovering the creditor’s judgment.

Government Assistance for COVID-19 is Exempt from All Creditor Claims: Additionally, Executive Order 20-50 mandates that the following forms of governmental assistance relating to COVID-19 are exempt from all claims by creditors:  (i) the federal stimulus check issued to individuals (up to $1,200/person, $2,400/married couple, and $500 per eligible child), and (ii) any state, local, or tribal governmental payments issued to relieved the economic impacts caused by COVID-19.

Domestic Support Obligations are Exempted from Executive Order 20-50: Notably, none of the provisions of Executive Order 20-50 apply to domestic support obligations such as child support and spousal maintenance.

Significant Penalties for Violations: Violations of Executive Order 20-50 carry a significant financial risk: “[A]ny person who is found to have violated this section is subject to a civil penalty of not more than $25,000 per violation.”  The Minnesota Attorney General is tasked with investigating and bringing enforcement actions to remediate and enjoin any alleged violation of Executive Order 20-50.

BOTTOM LINE

Executive Order 20-50 significantly curtails a creditor’s ability to collect consumer debts while the COVID-19 peacetime emergency remains in place.  Creditors must ensure they are in full compliance with Executive Order 20-50, or else they risk significant financial penalties.