Minnesota Prohibits Garnishment of COVID-19 Relief Funds

Minnesota Governor Tim Walz signed Executive Order 20-50 on May 4, 2020, which temporarily prevents the garnishment of COVID-19 relief funds by creditors and debt collectors. The Order states that government emergency support funds should go to their intended purpose–the immediate need of individuals’ health and safety–and should not be intercepted by third parties or immediately garnished for consumer debt incurred before the COVID-19 pandemic.

The Order applies to all garnishment claims made over federal, tribal, state and local COVID-19 funds, except for claims for child support and spousal maintenance. To qualify, the funds must be deemed to be government assistance based on need (government aid) under Minn. Stat. § 550.37, subd. 14 (providing that all government assistance based on need shall be exempt from claims of creditors).

The most prominent effect of this Order is that it prevents the automatic interception of funds paid directly to individuals and families that are intended to alleviate the financial burdens associated with COVID-19. Thus, direct stimulus payments made to individuals under the CARES Act, which we wrote about at UPDATE: Congress Passes Coronavirus Aid, Relief, and Economic Security Act, are protected by this Order. Creditors and debt collectors will no longer be able to divert this money. The Order also suspends all new consumer-debt garnishments.

This Order has no effect, however, on the garnishment of unemployment benefits or CARES Act supplemental unemployment benefits, previously discussed at Staying Connected with Your Client: Temporary Hours Reductions and the Minnesota Shared Work Program. These benefits are already protected by federal law from garnishment by creditors and debt collectors (but remain subject to child support and spousal maintenance obligations).

The Attorney General has the power to investigate and enforce an action to remediate and enjoin any alleged violation of this Order. Violators are subject to a civil penalty of up to $25,000 per violation.

The provisions of this Order are temporary and expire when the peacetime emergency declared in Executive Order 20-01 is terminated or until it is otherwise rescinded.