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Texas Supreme Court: Enforcement of Court-ordered Collections, CARES Act Payments Protected

Posted: May 21, 2020 | Author: Cornerstone Compliance Team

The Texas Supreme Court issued a new order, effective 5/15, regarding the collection of consumer debts by garnishment or receivership.

This new order resumes the issuance and service of writs of garnishment and turnover orders in Texas but protects those stimulus payments made to persons under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Debtors whose assets are the subject of a garnishment or turnover order are entitled to a hearing before the issuing court to determine if any of those assets are attributable to funds received under the CARES Act. These hearings must occur (in-person or remotely, if possible) within two business days of debtor's request.
   
Seized funds determined to be stimulus payments must be returned to the debtor by the court or turnover receiver.  
   
In addition, any new garnishment or turnover orders issued to debtors by a receiver or judgment creditor must include a new notice, which includes language reflecting the debtor's right to the above hearing and a court stay protecting any CARES Act payments.
   
This new order takes effect immediately and extends through Aug. 12, 2020.

WHAT DOES THIS MEAN FOR CREDIT UNIONS?

Credit unions should immediately resume ordinary procedures for complying with any garnishment orders or turnover requests. This means identifying member funds that are the target of these collections actions and freezing or turning them over to requesting parties as appropriate.
   
If a member insists that these funds are subject to protection as stimulus proceeds, it is the duty of that member to request a prompt hearing with the issuing court. Until the credit union receives an order from the court suspending some or all of a collections action, the credit union should proceed as normal.
   
See the court's original order.
   
If you have any questions, please contact Cornerstone's Information Central at 512-853-8515, or nbehncke@cornerstoneleague.coop.

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