Judge Rules Against Industry in Suit Over Arizona Garnishment Initiative

A state court judge in Arizona yesterday rejected an industry-led challenge to a voter initiative that is scheduled to be on the ballot this November that would raise the limits on what can be shielded from wage garnishments while also lowering the judgment interest rate, leading the group to quickly file an appeal with the state Supreme Court.

Time is of the essence for the group, called Protect our Arizona, to try and keep the question from being printed on the ballots that will be used this November. A copy of the ruling is available by clicking here.

In seeking to keep the question — which many expect will pass if it makes it on the ballot — from being added, the lawsuit targeted a summary explanation of the initiative, called the Predatory Debt Collection Act. The summary states:

Caps interest rate on “medical debt,” as defined in the Act; applies this cap to judgments on medical debt incurred. Increases the value of assets – a homestead, certain household possessions, a motor vehicle, funds in a single bank, and disposable earnings – protected from certain legal processes to collect debt. Annually adjusts these amended exemptions for inflation beginning 2024. Allows courts to further reduce the amount of disposable earnings subject to garnishment in some cases of extreme hardships. Does not affect existing contracts. Does not change existing law regarding secured debt.

The point of contention was surrounding the phrase, “secured debt.” The argument was whether that included involuntary or voluntary debts. In issuing his ruling, Judge Frank Moskowitz of Maricopa County Superior Court found that the term was “commonly understood” to mean voluntarily secured debts, not involuntarily secured, as the plaintiffs claimed in filing their suit. The measure seeks to only change existing law related to the collection of involuntarily secured debt, but not the law regarding secured debt, the judge found.

Judge Moskowitz also rejected the objection that the individuals who secured the signatures needed to get the initiative added to the ballot did not obtain the required affidavits with their application.

If enacted, the initiative would raise the homestead exemption to $400,000 from $150,000, would ban garnishing the wages of anyone earning less than $50,000 per year — with annual increases, and raise the exemption threshold in bank accounts to $5,000 from $300. Judgment interest rates on unpaid medical debts would be capped at 3%. The new law would also eliminate up to 70% of existing garnishments.

For more information about how and why the industry is trying to stop this initiative from making it on the ballot, check out this interview with Amber Russo, one of the leaders of Protect our Arizona.

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