A state executive order ensures that financial institutions and governments can't garnish federal financial assistance paid to individuals as part of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act.

According to Maryland Attorney General Brian E. Frosh (D) Gov. Larry Hogan (R) issued Executive Order 20-04-29-03 prohibiting financial institutions from garnishing the stimulus payments, except as related to child support.

The CARES Act provides for a one-time cash payment in the form of a refundable tax credit in the amount of $1,200 for each eligible individual and $2,400 for eligible individuals filing a joint return, plus an additional $500 for each dependent child. Individuals with higher incomes will receive a smaller payment or no payment.

The payments under the CARES Act are intended to be emergency support for the basic needs of tens of millions of Americans, Frosh said in an advisory last week, such as paying for rent, mortgages and food. "Therefore, the CARES Act exempts the stimulus payments from collection for debts owed to state and federal governments," Frosh said in the advisory.

The governor’s executive order also prohibits garnishment of the payments, except as related to child support, and prohibits Maryland banks and credit unions from using stimulus payments to offset debts, according to the advisory. The stimulus payments are to be treated as protected payments, similar to other benefit payments provided for essential needs.

Violations of the executive order are a violation of Maryland’s Debt Collection Practices Act and Consumer Protection Act and are subject to enforcement and penalties, according to Frosh. Under the Maryland Debt Collection Practices Act, it is illegal for a person collecting a consumer debt to “[c]laim, attempt, or threaten to enforce a right with knowledge that the right does not exist.” The Consumer Protection Act also prohibits any unfair, abusive or deceptive practices in the collection of consumer debts.

"A person violating the Consumer Protection Act is subject to paying injunctive relief, restitution and civil penalties of up to $10,000 per violation," Frosh said in his advisory.