The unprecedented COVID-19 pandemic has significantly affected the financial health of millions of Iowans. Unfortunately, the struggling economy resulted in monumental job layoffs, terminations, and furloughs. A historical number of Iowans have filed for unemployment benefits. The collateral effect of the depressed economy is that debtors and borrowers may experience difficulty making regular loan payments on their mortgage, car, and other monthly expenses.
In order to combat this anticipated issue, Governor Reynolds issued a proclamation on April 24, 2020, that temporarily suspended certain debt collection activities in Iowa. Specifically, said proclamation pertains to the following:
- Replevin actions pursuant to Iowa Code Section 643. A replevin action is a lawsuit filed by a creditor to repossess certain collateral that secures a loan obligation after the debtor defaults on the payments. The most common example of a replevin action is when a lender repossesses a car for failure to make timely payments.
- Foreclosure actions concerning agricultural property pursuant to Iowa Code Section 654A. A foreclosure action is a lawsuit filed by a lender to foreclose a mortgage or deed of trust after the borrower has defaulted on the loan repayment terms. Please note that the April 24, 2020, proclamation only applies to agricultural real estate. Commercial and residential properties are still subject to foreclosure actions at this time.
- Garnishments and Execution of Garnishments pursuant to Iowa Code Section 642. A garnishment may occur after a creditor has obtained a judgment against a debtor. The garnishment is a formal action initiated by a judgment creditor against the judgment debtor’s wages and/or bank account in an attempt to satisfy the outstanding judgment. Please understand that anyone with an ongoing domestic support obligation such as child support may still be subject to typical garnishment actions at this time.
Based on the foregoing, any and all pending lawsuits concerning the above-described replevin, foreclosure, and garnishment matters filed with Iowa courts are currently suspended. Furthermore, creditors are prohibited from filing new lawsuits concerning the above-described matters at this time. However, this proclamation does not in any way relieve any person or entity’s liability under a promissory note, contract, or otherwise. Finally, please be advised that this temporary suspension is only in effect until May 27, 2020, at 11:59 P.M.
Whether you are a creditor or debtor, if you need legal advice about the current status of debt collection matters, please contact Simpson Legal Group at (712) 256-9899, to set up an appointment to discuss your rights and options.