Garnishment of Unemployment Insurance and CARES Act Stimulus During COVID-19

April 15, 2020  

Many Idahoans are now receiving unemployment insurance benefits as a result of the COVID-19 crisis. Congress recently passed the CARES Act, which provides unemployment benefits to an expanded group of people, and provides that eligible persons will receive an additional $600 per week supplement to their unemployment benefits for a limited time.  

The CARES Act also provides for eligible persons to receive stimulus checks for up to $1,200 for each adult and $500 for each child. These checks soon will be electronically deposited into bank accounts for persons already set up for direct deposit with the IRS or Social Security. 

These federal public assistance benefits are desperately needed due to the COVID-19 crisis, and any delay in people receiving these benefits due to a garnishment proceeding would be harmful. Idaho Code section 11-603(6) exempts unemployment benefits from garnishment. Any benefits payable as part of a federal public assistance legislation are not subject to garnishment under Idaho Code section 11-603(4). Additionally, Idaho Code section 11-713(3) specifically exempts from garnishment unemployment and federal public assistance benefits. 

ILAS is taking the position that Idaho’s exemption statutes protect unemployment benefits and the CARES Act unemployment supplement and stimulus benefits from being seized from bank or credit union accounts to satisfy judgments. However, when it comes to the CARES Act unemployment supplement and stimulus benefits, which are new programs, no Idaho court has determined whether the existing statutory exemptions apply to these funds.  

When a creditor serves a notice of garnishment, the debtor can file a claim of exemption from the garnishment. The notice of garnishment, and a blank claim of exemption form with instructions, must be delivered or mailed to the debtor. The claim of exemption form can be used to claim that the federal CARES Act benefits received by all persons in the household are exempt from garnishment. If the notice of garnishment is received by a financial institution, such as a bank or credit union, it will conduct a garnishment review to determine if there are exempt funds in the debtor’s account. If the funds in the debtor’s account were electronically deposited, exempt federal public assistance or unemployment benefits are not subject to garnishment. The financial institution has three (3) business days to deliver or mail copies of the documents to the debtor at the address on the account. The sheriff also has one (1) business day to deliver or mail the notice of the garnishment and a claim of exemption form with instructions to the debtor.

If the debtor is required to file a claim of exemption, the debtor must deliver or mail a completed claim of exemption form to the sheriff in the county where the judgment was entered within fourteen (14) days after the date the notice of garnishment was served on the debtor. A debtor should follow the directions provided with the claim of exemption form.  When completing the exemption form, be sure to include the names of a spouse and children if they also received CARES Act supplemental unemployment or stimulus benefits, and those funds were deposited into the bank account that the creditor is trying to garnish.  

The creditor has five (5) business days after being served with the completed claim of exemption to file a motion, stating the grounds for contesting the claim of exemption, with the state court in the county where the judgment was entered. The creditor must deliver or mail to the debtor a copy of the motion contesting the claim of exemption, and a notice of the date and time for a hearing. The hearing must be scheduled within no less than five (5) nor more than twelve (12) days after the motion is filed, but may be continued for another date at the request of the debtor.  If the creditor notifies the sheriff that the claim of exemption is uncontested, or fails to notify the sheriff within five (5) days that the claim is being contested, the sheriff will release the exempt funds.  

The Idaho Supreme Court’s last emergency order staying most court actions will expire on April 22, 2020.  ILAS does not know whether this order will be extended.  On April 15, 2020, the Governor extended his “stay at home” order until April 30, 2020. It is likely the Idaho Supreme Court will also extend its order to April 30, 2020. ILAS does not know how the courts are processing and conducting hearings on claims of exemptions. It is our understanding that no hearings, except those necessary on an emergency basis, are currently being conducted. It is possible that a hearing on a claim of exemption may qualify as an emergency, and the court might schedule a telephone hearing.  

If you have a judgment against you and the creditor is attempting to garnish your unemployment benefits or federal stimulus check that has been deposited into your bank account, you should file a claim of exemption as soon as possible under these Idaho Code sections.  For more information on garnishments, please go to the “Topics” section of our website, select the “Consumer” box, then select “Garnishments.”

You can also call our COVID-19 legal hotline to speak with an ILAS attorney about your public benefits or garnishment questions.  Information on our hotlines is at the top of our website page.


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