In an order issued on April 20, the Indiana Supreme Court has exercised its rulemaking authority to prevent creditors from being able to attach or garnish stimulus payments issued under the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). See In re Petition to the Indiana Supreme Court to Engage in Emergency Rulemaking to Protect CARES Act Stimulus Payments From Attachment or Garnishment From Creditors, Nos. 20S-MS-258 and 20S-CB-123 (Ind. Apr. 20, 2020).
The Indiana Supreme Court has broad authority “to adopt, amend, and rescind rules of court that govern and control practice and procedure in all the courts of Indiana.” Indiana Code § 34-8-1-3. This includes the authority to restrict a creditor’s right to seize or garnish assets in satisfaction of a judgment under Indiana Trial Rule 64.
Because of the ongoing public health emergency relating to the 2019 novel coronavirus (“COVID-19”), the Court has exercised this authority to stop certain collection activities in the state. Specifically, on April 3, it issued an order prohibiting Indiana courts from issuing new writs of attachment, civil bench warrants, or body attachments and staying service of any writs, warrants, or attachments already issued.
Following the April 3 order, a group of organizations representing the interests of consumers filed a petition seeking additional rules to protect federal stimulus payments from attachment or garnishment by private creditors. After soliciting input from the creditor’s bar, the Court issued a ruling that provides as follows:
Courts shall issue no new orders placing a hold on, attaching, or garnishing funds in a judgment-debtor’s account in a depository institution . . . 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.
With regard to existing orders placing holds on accounts, a judgment-debtor is entitled to request a hearing (either in-person or remotely, as local circumstances permit) to determine which 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.
This order is to remain in effect until the expiration of the public health emergency as declared by Indiana’s Governor or until the Court orders otherwise.
We will continue to keep you apprised of the latest changes to the law in Indiana and other jurisdictions as the courts take action to deal with the fallout from the COVID-19 pandemic.