The Indiana Supreme Court issued an order Monday protecting some stimulus checks from being seized by creditors to pay past-due bills, but the decision drew a dissent from Justice Geoffrey Slaughter, who asserted the court was overstepping its role.

Indiana Legal Services, along with Prosperity Indiana, Neighborhood Christian Legal Clinic and Indiana Institute for Working Families, had petitioned the court to protect the payments that are being issued as part of the federal Coronavirus Aid, Relief and Economic Security Act. The groups told the court that the checks were intended to help households cover basic necessities such food and rent during the COVID-19 emergency. As such, creditors including auto dealers, credit card companies and hospitals should not be allowed to scoop stimulus money from their debtors.

The court order granted in part and denied in part the request for relief.

As part of the order, state courts are prohibited from issuing new orders that place a hold on, attach or garnish stimulus payments that are deposited into a debtor’s account.

However, the protection of the stimulus money does not apply to judgments or orders for child support. Also, any previously issued court orders placing a hold on a debtor’s account must be subjected to a hearing before any protection is provided to the stimulus funds. Debtors with such holds on their accounts can request a hearing and make an argument about the stimulus payment being exempted under state or federal law.   

The majority countered the dissent written by Slaughter. Asserting it could suspend the issuance of all holds, attachments or garnishment orders during the coronavirus outbreak, the court maintained such a step would impede legitimate collection efforts.

“But as the Court can rightfully take that drastic step, it does not overstep the judicial role to order a much narrower and more carefully tailored subset of that relief during the period of this national and state public health emergency,” Chief Justice Loretta Rush wrote for the majority joined by justices Steven David, Christopher Goff and Mark Massa.

In his dissent, Slaughter said the Indiana Supreme Court was going beyond its judicial boundaries. Instead of sticking to its constitutional duty of solely interpreting the law, he wrote, the state’s highest court was making law by extending protections that Congress did not enact.

“The Court today invokes our original jurisdiction, with which we supervise the practice and procedure in Indiana courts, to issue an emergency rule providing what is tantamount to substantive legal relief,” Slaughter wrote. “We do so based on the view that individual stimulus payments that Congress recently appropriated under the CARES Act are to be used for life’s necessities and, thus, should be exempt from garnishment and attachment by debt collectors and judgment creditors. Whether or not this result is what Congress intended, it is not what Congress enacted. Nowhere did Congress declare these payments to be off-limits to collectors and creditors. And, to date, neither has our legislature.”

As part of its review of the petition, the court invited responses from the creditors’ bar. Those who provided additional briefing included Perry Law Office the International Association of Commercial Creditors and Rubin & Levin, which was joined by Blitt and Gaines and Stenger & Stenger.

According to the court, the creditors and their law firms objected to the breadth of the requested relief but they all agreed the stimulus payments should be protected against garnishment by judgment creditors. Also, the court received a copy of the letter sent by the American Bankers Association and other organizations, urging Congress to clarify the CARES checks are exempt from garnishment.

The order will remain in effect until Gov. Eric Holcomb declares the end of the COVID-19 public health emergency or until the court issues a subsequent order.