A bill to change the way creditors garnish bank accounts has not faced opposition at committee hearings in the General Assembly, but consumer advocates are now mounting last-minute opposition after learning this week about the legislation’s existence.
Senate Bill 397 establishes a presumption that a garnishment against accounts held jointly by spouses is valid unless one of the spouses objects within 30 days of the writ of garnishment being served on the debtor.
The problem with the bill, according to opponents, is it reverses a longstanding tradition in Maryland law – property owned jointly by spouses is not subject to garnishment by creditors of only one spouse.
The goal of the legislation is to clarify existing law that does not address the practicalities of garnishing a bank account in two or more names, Sen. Wayne Norman, the bill’s sponsor, told the Senate Judicial Proceedings Committee during a hearing in February. Currently, if a creditor files something with the court to access the money, the account is frozen and a judge may set the issue in for a hearing, putting the funds in limbo for months.
Property held as tenants by the entirety by spouses is not subject to garnishment, but banks and creditors are not aware of the relationship between joint account holders, according to Norman, R-Cecil and Harford counties.
“This is just a really technical cleanup, just a technical clarification of the law,” Michele Gagnon, a member of the National Creditors Bar Association board, told the committee.
The bill was approved by the committee by 6-5 vote and passed the Senate by a vote of 40-6 before heading to the House Judiciary Committee for a hearing late last month. No further action has been taken by the committee as of Thursday afternoon.
But it was only this week that members of the Bankruptcy Section of the Maryland State Bar Association and advocacy groups found out about the bill, according to Cheryl Hystad, executive director of Civil Justice Inc.
“No one saw this bill coming and it flew below the radar,” she said. “There’s something like 2,800 bills filed this session so it is easy, unfortunately, for things to escape notice.”
Norman said Thursday he learned there was opposition to the bill but pointed out there was none at either hearing for the bill.
“I don’t know what provoked somebody to wake up and look at it,” he said. “Maybe I ruffled their feathers.”
Opponents say the bill also runs contrary to the Maryland Constitution which states, “The property of the wife shall be protected from the debts of her husband.”
“In this last-minute rush of bill-making, this would have gone through,” said Adam Spence, who learned about the bill through Civil Justice and was one of several attorneys to email members of the House of Delegates in opposition.
Another concern with the bill, according to Spence, who practices collection law, is the non-debtor spouse is not guaranteed to receive notice.
“There’s no due process in place to protect the non-debtor spouse’s interest,” said Spence, of Spence|Brierley PC in Towson.
Spence wrote members of the House Judiciary Committee that he is troubled by the bill for its implications for families, particularly the poor.
“Simply stated, couples that are working jointly to support the family could lose significant amounts of money earned by a non-debtor spouse with no judgement against them,” he wrote.
At the February’s Senate committee hearing, Sen. Victor R. Ramirez, D-Prince George’s County, expressed concern about the bill’s implications for the non-debtor spouse, asking proponents repeatedly how they would be notified about a garnishment against their account.
“They would find out very quickly,” Gagnon said, suggesting because the account is frozen, one of the account holders would learn about the garnishment.
“You make it sound very straightforward, but I don’t think it’s that straightforward,” Ramirez replied. He would be one of the five senators to vote against advancing the bill out of committee.
Hystad said the Maryland Office of the Attorney General’s Consumer Protection Division was informed about the bill and contacted the House Judiciary Committee expressing opposition, and individual attorneys have been reaching out.
Normally, when Civil Justice learns about a bill they wish to oppose, Hystad said written opposition would be submitted ahead of committee hearings and someone would speak at the hearings.
“This is part of the normal procedure,” she said. “If people don’t find out about a bill before the hearing, you still have the opportunity to contact members of the committee.”