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Financial Services Law Insights and Observations

NY AG exempts stimulus payments from garnishment

State Issues State Attorney General Debt Collection Consumer Finance Covid-19

State Issues

On March 24, the New York attorney general issued official guidance for New York state banking institutions, creditors, and debt collectors to clarify that federal stimulus payments are exempt from garnishment under New York law. The guidance, which is based on multiple state and federal consumer protection laws, explains that any attempt to garnish stimulus funds from consumers in the state would constitute “illegal acts” because such garnishment would violate prohibitions under the New York City Consumer Protection Law, New York General Business Law 601(8), the FDCPA, and Dodd-Frank prohibitions of unfair, deceptive, and abusive acts or practices. Banking institutions are also advised to treat these stimulus payments “as subject to the same protections as statutorily exempt payments.”

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