As of May 5, 2020, Governor Walz has issued 51 Executive Orders in 2020. Each of these 2020 Executive Orders is related to the COVID-19 peacetime emergency. Executive Order 20-50 was issued on May 4, 2020 and is titled “Ensuring the Protection of Emergency Government Support and Consumers’ Financial Security from Consumer Garnishment Actions During the COVID-19 Peacetime Emergency.” As the mouthful of a title suggests, Executive Order 20-50 aims to protect the recovery rebates issued to individuals and families under the CARES Act and provide consumer debtors relief from automatic garnishments.
Pursuant to the Order, the CARES recovery rebates will be treated as “government assistance based on need” which will exempt the money from all claims by creditors. This means a creditor cannot involuntarily take the recovery rebate funds even if that creditor has a judgment and is legally entitled to collect those amounts from the debtor. The recovery rebate funds are “exempt” from collection and protected. All state, local and tribal governmental payments issued to relieve the adverse economic impact caused by the COVID-19 pandemic will be treated as having the same “exempt” status.
Executive Order 20-50 also suspends any garnishment actions against Consumer Debtors until the end of the peacetime emergency. A garnishment is a legal action available to a creditor holding a judgment against a debtor. By issuing a Garnishment Summons, a creditor can require a third party garnishee (for example, a bank or an employer) to hold the debtor’s money for the creditor. The creditor can then take that money within a certain time period to apply to the debtor’s debt. Bank accounts and wages are the most commonly garnished funds. Executive Order 20-50 suspends a creditor’s ability to issue a garnishment summons against a debtor that is a natural person and whose 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 (i.e., a “Consumer Debtor”).
The Consumer Debtor’s liability for the underlying judgment debt remains. That debt will also continue to accrue post-judgment interest. But Executive Order 20-50 does provide a Consumer Debtor some immediate relief from the relatively “automatic” involuntary collection of a garnishment.