The COVID-19 pandemic is an unprecedented event in our history. Due to extended stay-at-home orders in many states, an enormous number of people have faced unpaid furloughs, a reduction in paid working hours or in some cases unemployment. During the first two months of the pandemic, more than 36 million U.S. workers filed for unemployment, a record high for our country. Although some of those who were financially impacted received emergency financial assistance in the form of stimulus checks or unemployment payments, many people received no assistance at all. In these times of economic uncertainty, you may be wondering if your existing wages or unemployment payments can be garnished if your employment has been impacted by COVID-19.
Understanding Wage Garnishment
Wage garnishment is a process by which a creditor can take over or “garnish” wages or income in order to pay off a debt owed. Any individual or business can be subject to a garnishment, but the garnishment can only take place with a court order. For example, if a creditor wants to collect money owed and they are able to obtain a final judgement or court order against the debtor, then the individual’s wages or property may be garnished. In Maryland, this type of court judgement is enforceable for up to 12 years, but it can also be renewed.
The CARES Act
In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act – a $2 trillion economic relief package for both employees and small businesses which included immediate stimulus payments for qualifying individuals. Although this law was created to help Americans who were struggling financially due the pandemic, the stimulus payments themselves were not protected from garnishment by debt collectors. In April 2020, Maryland Attorney General Brian Frosh, along with a coalition of 25 other attorneys, called for Treasury Secretary Steven Mnuchin to protect the CARES Act funds and ensure that stimulus payments were protected from wage garnishment. Unfortunately, as of the publish date of this article, no protections have been put into place.
Wage Garnishments And COVID-19
To date, wage garnishment processes for employers remain largely unchanged during the COVID-19 pandemic. Child support orders are still in effect, but student loan garnishments have been put on pause due to a U.S. Department of Education (DOE) directive which authorized immediate suspension of garnishments for federal student loans for at least 60 days. State laws differ in terms of the handling of wage garnishments from creditors.
Protect Your Income
Although it may seem unfair that most wage garnishment is continuing during such a difficult time, there are things that you can do to protect your income (unemployment or otherwise) from being garnished by creditors. If you receive a demand letter from a creditor, it is very important that you do not ignore it. Many creditors prefer to work directly with debtors to avoid the time and money involved in securing a court judgement. An experienced attorney can reach out to a creditor on your behalf to work out a payment plan for all or a reduced portion of the debt. If a court judgement has already been secured for garnishment of your wages, an experienced attorney may be able to object to or challenge the judgement.
Leverage The Experience Of A Highly Qualified, Local Bankruptcy Attorney
A sudden reduction in income as the result of wage garnishment or a change in employment status is both frightening and stressful. Bankruptcy is a valid, legal tool for fighting overwhelming debt and predatory creditors. At Sirody & Associates, our attorneys have deep knowledge of Maryland bankruptcy law and over 20 years of experience in wage garnishment cases. If your wages or unemployment benefits are being garnished, contact us online or call (410) 415-0445 today. We are available to meet with you over the phone or by video conference. We will take the time to understand your specific situation and will share strategies to get you back on track financially and get the fresh start you deserve.