ENGROSSED SECOND SUBSTITUTE SENATE BILL 5651

BySenate Ways & Means (originally sponsored by Senators Alvarado, Valdez, Cortes, Nobles, Salomon, Slatter, Stanford, and Trudeau)

AN ACT Relating to exemptions from garnishment; amending RCW 6.15.010, 6.15.050, 6.27.140, and 6.27.100; repealing 2023 c 393 s 6, and 2021 c 50 s 4 (uncodified); providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 6.15.010 and 2023 c 393 s 1 are each amended to read as follows:

(1) Except as provided in RCW 6.15.050, the following personal property is exempt from execution, attachment, and garnishment:

(a) All wearing apparel of every individual and family, but not to exceed $3,500 in value in furs, jewelry, and personal ornaments for any individual.

(b) All private libraries including electronic media, which includes audiovisual, entertainment, or reference media in digital or analogue format, of every individual, but not to exceed $3,500 in value, and all family pictures and keepsakes.

(c) A cell phone, personal computer, and printer.

(d) To each individual or, as to community property of spouses maintaining a single household as against a creditor of the community, to the community, provided that each spouse is entitled to his or her own exemptions in this subsection (1)(d):

(i) All household goods, appliances, furniture, and home and yard equipment, not to exceed $6,500 in value for the individual, said amount to include provisions and fuel for comfortable maintenance;

(ii) In a bankruptcy case, any other personal property, except personal earnings as provided under RCW 6.15.050(1), not to exceed $10,000 in value. The value shall be determined as of the date the bankruptcy petition is filed;

(iii)(A) Other than in a bankruptcy case as described in (d)(ii) of this subsection, other personal property, except personal earnings as provided under RCW 6.15.050(1), not to exceed $3,000 in value, of which not more than:

(((A)))(I) For all debts except private student loan debt and consumer debt, $500 in value may consist of bank accounts, savings and loan accounts, stocks, bonds, or other securities. The maximum exemption under this subsection (1)(d)(iii)(A)(I) shall be automatically protected and may not exceed $500, regardless of the number of existing separate bank accounts, savings and loan accounts, stocks, bonds, or other securities.

(((B)))(II) For all private student loan debt, $2,500 in value may consist of bank accounts, savings and loan accounts, stocks, bonds, or other securities. $1,000 in value shall be automatically protected. The maximum exemption under this subsection (1)(d)(iii)(((B)))(A)(II) may not exceed $2,500, regardless of the number of existing separate bank accounts, savings and loan accounts, stocks, bonds, or other securities.

(((C)))(III) For all consumer debt, $2,000 in value may consist of bank accounts, savings and loan accounts, stocks, bonds, or other securities. (($1,000 in value shall be automatically protected.)) The maximum exemption under this subsection (1)(d)(iii)(((C)))(A)(III) shall be automatically protected and may not exceed $2,000, regardless of the number of existing separate bank accounts, savings and loan accounts, stocks, bonds, or other securities.

(II) Round to the nearest $25 the dollar amount that represents such change;

(iv) A motor vehicle not to exceed $15,000 in aggregate value;

(v) Any past due, current, or future child support, alimony, or spousal support paid or owed to the debtor, which can be traced;

(vi) All professionally prescribed health aids for the debtor or a dependent of the debtor;

(vii) To any individual, the right to or proceeds of a payment not to exceed twenty thousand dollars on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or the right to or proceeds of a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; and

(viii) In a bankruptcy case, the right to or proceeds of personal injury of the debtor or an individual of whom the debtor is a dependent; or the right to or proceeds of a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent are free of the enforcement of the claims of creditors, except to the extent such claims are for the satisfaction of any liens or subrogation claims arising out of the claims for personal injury or death. The exemption under this subsection (1)(d)(viii) does not apply to the right of the state of Washington, or any agent or assignee of the state, as a lienholder or subrogee under RCW 43.20B.060.

(e) To any individual, the tools, instruments, materials, and supplies used to carry on his or her trade not to exceed $15,000 in value.

(f) Tuition units, under chapter 28B.95 RCW, purchased more than two years prior to the date of a bankruptcy filing or court judgment, and contributions to any other qualified tuition program under 26 U.S.C. Sec. 529 of the internal revenue code of 1986, as amended, and to a Coverdell education savings account, also known as an education individual retirement account, under 26 U.S.C. Sec. 530 of the internal revenue code of 1986, as amended, contributed more than two years prior to the date of a bankruptcy filing or court judgment.

(2) For purposes of this section, "value" means the reasonable market value of the debtor's interest in an article or item at the time it is selected for exemption, exclusive of all liens and encumbrances thereon.

(3) In the case of married persons, each spouse is entitled to the exemptions provided in this section, which may be combined with the other spouse's exemption in the same property or taken in different exempt property.

Sec. 2. RCW 6.15.050 and 2002 c 265 s 2 are each amended to read as follows:

(1) Wages, salary, or other compensation regularly paid for personal services rendered by the debtor claiming the exemption shall not be claimed as exempt under RCW 6.15.010, but the same may be claimed as exempt in any bankruptcy or insolvency proceeding to the same extent as allowed under the statutes relating to garnishments.

(2) No property may be exempt under RCW 6.15.010 from execution, attachment, or garnishment issued upon a judgment for all or any part of the purchase price of the property.

(3) No property may be exempt under RCW 6.15.010 from legal process issued upon a judgment for restitution ordered by a court to be paid for the benefit of a victim of a criminal act.

(4) No property may be exempt under RCW 6.15.010 from legal process issued upon a judgment for any tax levied upon such property.

(5) Nothing in this chapter shall be so construed as to prevent a debtor from creating a security interest in personal property which might be claimed as exempt, or the enforcement of such security interest against the property.

(6) Nothing in this chapter shall be construed to exempt personal property of a nonresident of this state or of an individual who has left or is about to leave this state with the intention to defraud his or her creditors.

(7) Personal property exemptions are waived by failure to claim them prior to sale of exemptible property under execution or, in a garnishment proceeding, within the time specified in RCW 6.27.160.

(8) Personal property exemptions may not be claimed by one spouse in a bankruptcy case that is not a joint case or a joint administration of the estate with the bankruptcy estate of the other spouse where (a) bankruptcy is filed by both spouses within a six-month period, and (b) one spouse exempts property from property of the estate under the bankruptcy exemption provisions of 11 U.S.C. Sec. 522(d).

(9) No property may be exempt under RCW 6.15.010 from execution, levy, attachment, or garnishment issued by or on behalf of a child support, alimony, or spousal support agency operating under Title IV-D of the federal social security act or by or on behalf of any agent or assignee of the child support, alimony, or spousal support agency.

Sec. 3. RCW 6.27.140 and 2023 c 393 s 5 are each amended to read as follows:

(1) The notice required by RCW 6.27.130(1) to be mailed to or served on an individual judgment debtor shall be in the following form, printed or typed in no smaller than size twelve point font:

NOTICE OF GARNISHMENT

AND OF YOUR RIGHTS

A Writ of Garnishment issued in a Washington court has been or will be served on the garnishee named in the attached copy of the writ. After receipt of the writ, the garnishee is required to withhold payment of any money that was due to you and to withhold any other property of yours that the garnishee held or controlled. This notice of your rights is required by law.

YOU HAVE THE FOLLOWING EXEMPTION RIGHTS:

WAGES. If the garnishee is your employer who owes wages or other personal earnings to you, your employer is required to pay amounts to you that are exempt under state and federal laws, as explained in the writ of garnishment. You should receive a copy of your employer's answer, which will show how the exempt amount was calculated. A garnishment against wages or other earnings for child support may not be issued under chapter 6.27 RCW. If the garnishment is for private student loan debt, the exempt amount paid to you will be the greater of the following: A percent of your disposable earnings, which is eighty-five percent of the part of your earnings remaining after your employer deducts those amounts which are required by law to be withheld, or fifty times the minimum hourly wage of the highest minimum wage law in the state at the time the earnings are payable. If the garnishment is for consumer debt, the exempt amount paid to you will be the greater of the following: A percent of your disposable earnings, which is eighty percent of the part of your earnings remaining after your employer deducts those amounts which are required by law to be withheld, or thirty-five times the state minimum hourly wage.

BANK ACCOUNTS. If the garnishee is a bank or other institution with which you have an account in which you have deposited benefits such as Temporary Assistance for Needy Families, Supplemental Security Income (SSI), Social Security, veterans' benefits, unemployment compensation, or any federally qualified pension, such as a state or federal pension, individual retirement account (IRA), or 401K plan, you may claim the account as fully exempt if you have deposited only such benefit funds in the account. It may be partially exempt even though you have deposited money from other sources in the same account. An exemption is also available under RCW 26.16.200, providing that funds in a community bank account that can be identified as the earnings of a stepparent are exempt from a garnishment on the child support obligation of the parent.

OTHER EXEMPTIONS. If the garnishee holds other property of yours, some or all of it may be exempt under RCW 6.15.010, a Washington statute that exempts certain property of your choice (including, if the judgment is for private student loan debt, up to (($2,500.00))$ . . . . . in a bank account, or for a marital community or domestic partnership up to (($5,000.00))$ . . . . . in a bank account; if the judgment is for other consumer debt, up to (($2,000.00))$ . . . . . in a bank account, or for a marital community or domestic partnership up to (($4,000.00))$ . . . . . in a bank account; or, if the judgment is for any other debts, up to (($500.00))$ . . . . . in a bank account, or for a marital community or domestic partnership up to (($1,000.00))$ . . . . . in a bank account) and certain other property such as household furnishings, tools of trade, and a motor vehicle (all limited by differing dollar values).

HOW TO CLAIM EXEMPTIONS. Fill out the enclosed claim form and mail or deliver it as described in instructions on the claim form. If the plaintiff does not object to your claim, the funds or other property that you have claimed as exempt must be released not later than 10 days after the plaintiff receives your claim form. If the plaintiff objects, the law requires a hearing not later than 14 days after the plaintiff receives your claim form, and notice of the objection and hearing date will be mailed to you at the address that you put on the claim form.

THE LAW ALSO PROVIDES OTHER EXEMPTION RIGHTS. IF NECESSARY, AN ATTORNEY CAN ASSIST YOU TO ASSERT THESE AND OTHER RIGHTS, BUT YOU MUST ACT IMMEDIATELY TO AVOID LOSS OF RIGHTS BY DELAY.

(2)(a) If the writ is to garnish funds or property held by a financial institution, the claim form required by RCW 6.27.130(1) to be mailed to or served on an individual judgment debtor shall be in the following form, printed or typed in no smaller than size twelve point font:

CAUTION: If the plaintiff objects to your claim, you will have to go to court and give proof of your claim. For example, if you claim that a bank account is exempt, you may have to show the judge your bank statements and papers that show the source of the money you deposited in the bank. Your claim may be granted more quickly if you attach copies of such proof to your claim.

IF THE JUDGE DENIES YOUR EXEMPTION CLAIM, YOU WILL HAVE TO PAY THE PLAINTIFF'S COSTS. IF THE JUDGE DECIDES THAT YOU DID NOT MAKE THE CLAIM IN GOOD FAITH, HE OR SHE MAY DECIDE THAT YOU MUST PAY THE PLAINTIFF'S ATTORNEY FEES.

(b) If the writ is directed to an employer to garnish earnings, the claim form required by RCW 6.27.130(1) to be mailed to or served on an individual judgment debtor shall be in the following form, printed or typed in no smaller than size twelve point font type:

CAUTION: If the plaintiff objects to your claim, you will have to go to court and give proof of your claim. For example, if you claim that a bank account is exempt, you may have to show the judge your bank statements and papers that show the source of the money you deposited in the bank. Your claim may be granted more quickly if you attach copies of such proof to your claim.

IF THE JUDGE DENIES YOUR EXEMPTION CLAIM, YOU WILL HAVE TO PAY THE PLAINTIFF'S COSTS. IF THE JUDGE DECIDES THAT YOU DID NOT MAKE THE CLAIM IN GOOD FAITH, HE OR SHE MAY DECIDE THAT YOU MUST PAY THE PLAINTIFF'S ATTORNEY FEES.

(c) If the writ under (b) of this subsection is not a writ for the collection of private student loan debt, the exemption language pertaining to private student loan debt may be omitted.

(d) If the writ under (b) of this subsection is not a writ for the collection of consumer debt, the exemption language pertaining to consumer debt may be omitted.

Sec. 4. RCW 6.27.100 and 2023 c 393 s 4 are each amended to read as follows:

(1) A writ issued for a continuing lien on earnings shall be substantially in the form provided in RCW 6.27.105. All other writs of garnishment shall be substantially in the following form, but:

(a) If the writ is issued under an order or judgment for child support, the following statement shall appear conspicuously in the caption: "This garnishment is based on a judgment or order for child support";

(b) If the writ is issued under an order or judgment for private student loan debt, the following statement shall appear conspicuously in the caption: "This garnishment is based on a judgment or order for private student loan debt";

(c) If the writ is issued under an order or judgment for consumer debt, the following statement shall appear conspicuously in the caption: "This garnishment is based on a judgment or order for consumer debt"; and

(d) If the writ is issued by an attorney, the writ shall be revised as indicated in subsection (2) of this section:

YOU ARE HEREBY COMMANDED, unless otherwise directed by the court, by the attorney of record for the plaintiff, or by this writ, not to pay any debt, whether earnings subject to this garnishment or any other debt, owed to the defendant at the time this writ was served and not to deliver, sell, or transfer, or recognize any sale or transfer of, any personal property or effects of the defendant in your possession or control at the time when this writ was served. Any such payment, delivery, sale, or transfer is void to the extent necessary to satisfy the plaintiff's claim and costs for this writ with interest.

YOU ARE FURTHER COMMANDED to answer this writ according to the instructions in this writ and in the answer forms and, within twenty days after the service of the writ upon you, to mail or deliver the original of such answer to the court, one copy to the plaintiff or the plaintiff's attorney, and one copy to the defendant, at the addresses listed at the bottom of this writ.

If you owe the defendant a debt payable in money in excess of the amount set forth in the first paragraph of this writ, hold only the amount set forth in the first paragraph and any processing fee if one is charged and release all additional funds or property to defendant.

FOR ALL DEBTS EXCEPT PRIVATE STUDENT LOAN DEBT AND CONSUMER DEBT:

If you are a bank or other institution in which the defendant has accounts to which the exemption under RCW 6.15.010(1)(d)(iii)(A)(I) applies and the total of the amounts held in all of the defendant's accounts is less than or equal to (($500))$ . . . . ., release all funds or property to the defendant and do not hold any amount. However, if you have documentation that the funds in the account are the community property of married persons or domestic partners, and if the total of the amounts held in all of the combined accounts of the married persons or domestic partners is less than or equal to (($1,000))$ . . . . ., then release all funds or property to the defendant and do not hold any amount.

If you are a bank or other institution in which the defendant has accounts to which the exemption under RCW 6.15.010(1)(d)(iii)(A)(I) applies and the total of the amounts held in all of the defendant's accounts is in excess of (($500))$ . . . . ., release at least (($500))$ . . . . ., hold no more than the amount set forth in the first paragraph of this writ and any processing fee if one is charged, and release additional funds or property, if any, to the defendant. However, if you have documentation that the funds in the account are the community property of married persons or domestic partners, and if the total of the amounts held in all of the combined accounts of the married persons or domestic partners is in excess of (($1,000))$ . . . . ., release at least (($1,000))$ . . . . ., hold no more than the amount set forth in the first paragraph of this writ and any processing fee if one is charged, and release additional funds or property, if any, to the defendant.

FOR PRIVATE STUDENT LOAN DEBT AND CONSUMER DEBT:

If you are a bank or other institution in which the defendant has accounts to which the exemption under RCW 6.15.010(1)(d)(iii) (((B) or (C)))(A) (II) or (III) applies and the total of the amounts held in all of the defendant's accounts is less than or equal to (($1,000))$ . . . . ., release all funds or property to the defendant and do not hold any amount. However, if you have documentation that the funds in the account are the community property of married persons or domestic partners, and if the total of the amounts held in all of the combined accounts of the married persons or domestic partners is less than or equal to (($2,000))$ . . . . ., then release all funds or property to the defendant and do not hold any amount.

If you are a bank or other institution in which the defendant has accounts to which the exemption under RCW 6.15.010(1)(d)(iii) (((B) or (C)))(A) (II) or (III) applies and the total of the amounts held in all of the defendant's accounts is in excess of (($1,000))$ . . . . ., release at least (($1,000))$ . . . . ., hold no more than the amount set forth in the first paragraph of this writ and any processing fee if one is charged, and release additional funds or property, if any, to the defendant. However, if you have documentation that the funds in the account are the community property of married persons or domestic partners, and if the total of the amounts held in all of the combined accounts of the married persons or domestic partners is in excess of (($2,000))$ . . . . ., release at least (($2,000))$ . . . . ., hold no more than the amount set forth in the first paragraph of this writ and any processing fee if one is charged, and release additional funds or property, if any, to the defendant.

IF YOU FAIL TO ANSWER THIS WRIT AS COMMANDED, A JUDGMENT MAY BE ENTERED AGAINST YOU FOR THE FULL AMOUNT OF THE PLAINTIFF'S CLAIM AGAINST THE DEFENDANT WITH ACCRUING INTEREST, ATTORNEY FEES, AND COSTS WHETHER OR NOT YOU OWE ANYTHING TO THE DEFENDANT. IF YOU PROPERLY ANSWER THIS WRIT, ANY JUDGMENT AGAINST YOU WILL NOT EXCEED THE AMOUNT OF ANY NONEXEMPT DEBT OR THE VALUE OF ANY NONEXEMPT PROPERTY OR EFFECTS IN YOUR POSSESSION OR CONTROL.

JUDGMENT MAY ALSO BE ENTERED AGAINST THE DEFENDANT FOR COSTS AND FEES INCURRED BY THE PLAINTIFF.

Witness, the Honorable . . . . . . . ., Judge of the above-entitled Court, and the seal thereof, this . . . . day of . . . . . ., . . . . (year)

[Seal]

(2) If an attorney issues the writ of garnishment, the final paragraph of the writ, containing the date, and the subscripted attorney and clerk provisions, shall be replaced with text in substantially the following form:

"This writ is issued by the undersigned attorney of record for plaintiff under the authority of chapter 6.27 of the Revised Code of Washington, and must be complied with in the same manner as a writ issued by the clerk of the court.

(1) 2023 c 393 s 6 (uncodified); and

(2) 2021 c 50 s 4 (uncodified).

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