The ongoing coronavirus pandemic has caused financial hardship for many Ohioans, especially those facing debt collection.
For better or worse, debt collection must continue, in part because it helps debtors – individuals, businesses and others – avoid falling into even more debt.
Some of the safety-net programs recently enacted by Congress as well as actions by individual courts throughout the state are designed to ease the challenges for those struggling to make ends meet. Here’s a rundown, with additional relief likely to follow:
Federal Stimulus Payments
Under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the federal government began issuing checks to U.S. taxpayers in order to provide some relief from the financial damage caused by the pandemic and to cover basic needs. The current wave of stimulus checks began in mid-April with direct deposits, which will continue to be issued into the summer. Paper checks, initiated on April 24, will continue into September.
The check disbursement began with individuals whose adjusted gross income (AGI) is less than $10,000 and are now being issued according to AGI in ascending order, about 5 million checks per week. This process should be completed by Sept. 4, although changes are possible.
The CARES Act prevents the federal government from garnishing (seizing) people’s stimulus checks for anything except child support.
Although federal law does not explicitly prevent garnishments by private debt collectors, the office of Ohio Attorney General Dave Yost believes that the stimulus payments are protected and exempt from attachment or garnishment by both public and private debt collectors.
Many in the private sector have echoed this position, as have other states. In a collective show of support, many consumer and banking industry groups sent a letter to Congress urging them to clarify that these stimulus payments are protected from garnishment. Attorney General Yost joined 24 other state attorneys general urging the Department of the Treasury to ensure that the payments are not subject to garnishment.
Federal Student Loans
The CARES Act also provides relief when it comes to federally held student loans. No payments are required from March 13, 2020 to Sept. 30, 2020 and no interest will accrue during that period.
The U.S. Department of Education has also placed a 60-day hold on garnishments for such student loans. Other loans, such as Perkins loans held by universities (not the U.S. Department of Education) are not covered by the CARES Act. Consumers should check directly with private loan providers to see if they are offering pandemic-related relief at this time.
Throughout Ohio, numerous courts have adopted measures to limit what creditors can pursue during the pandemic.
Franklin County, for example, has postponed all garnishment hearings, foreclosure hearings, judgment debtor exams and evictions into May, while Lucas County has delayed only debtor exams, with bench trials proceeding.
Cuyahoga County has paused foreclosures for 60 days and suspended in-person civil proceedings for 30 days – an order that was extended on March 31. Hamilton County has limited access to their buildings, extending their continuation of civil proceedings and dates until May 1, but are moving forward with emergency civil matters, including pending garnishment hearings. Consumers should check with their local court to see how they are handling business during the pandemic.
How an Attorney Can Help
As states begin their processes of reopening, we will likely see more state and federal legislation addressing many issues involving COVID-19. New bills are being introduced daily, including measures calling for additional stimulus payments, restrictions on debt collections and changes to the student loan system. An attorney can help consumers navigate this constantly changing landscape as well as help them through their case as different courts are operating in different ways at this time.
Consumers facing financial hardship can potentially qualify for legal aid.
Amy Kaufman is a senior assistant attorney general and Cory Steinmetz is an associate assistant attorney general in the Collections Enforcement Section of the Ohio Attorney General’s Office.
Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.