Garnishments; automatic exemption, accounts with depository institution.
HB1864 amends Virginia’s garnishment and homestead exemption law to create an automatic exemption for a householder’s deposit accounts at a single depository institution up to $500. When a bank, credit union, or savings institution receives a garnishment, attachment, or other levy, it must report whether the account balance is at or below $500 or, if above that amount, hold only the excess pending further court order. The bill also clarifies that the $500 exemption is tied to accounts at each individual institution, does not create a cause of action against a complying institution, and does not prevent a debtor from claiming additional exemptions through existing court procedures.
The bill further provides that the $500 automatic exemption will be adjusted every three years beginning April 1, 2027, based on changes in the Consumer Price Index for urban consumers, rounded to the nearest $25. It also coordinates the new automatic exemption with Virginia’s homestead exemption rules by reducing the remaining homestead exemption only when the $500 amount is not otherwise covered by another state or federal exemption. The measure retains the existing homestead deed framework for claiming personal property exemptions and updates the required form language to reflect the new structure.
In practical terms, the bill affects debt collection and creditor-process procedures in Virginia by protecting a small amount of money in bank accounts from immediate garnishment and by requiring financial institutions to identify and preserve only the non-exempt portion. It primarily impacts household debtors, creditors, courts, and depository institutions, while leaving the broader homestead exemption system in place. The Department of Planning and Budget is directed to provide updated dollar amounts to the Virginia Code Commission before each scheduled adjustment.
The bill appears to have been broadly supported in the House, moving through subcommittee and committee with strong bipartisan votes and passing the House 91-5. That voting pattern suggests general agreement that the measure provides a modest consumer protection without significantly disrupting garnishment enforcement. No committee transcript was provided, so the record does not show detailed debate, but the structure of the bill indicates the main policy balance is between protecting low-balance accounts for debtors and preserving creditor access to funds above the exempt amount.
The main point of potential contention is the scope and administration of the automatic exemption: creditors and financial institutions may be concerned about compliance burdens, while consumer advocates may view $500 as too low to meaningfully protect vulnerable households. Another possible issue is how the automatic exemption interacts with existing homestead and other exemption claims, since the bill requires coordination among multiple exemption provisions and court procedures.
HB1864 amends Code of Virginia § 34-14 to add an automatic $500 exemption for deposit accounts at a single bank, credit union, or savings institution when those accounts are subject to garnishment or similar levy. It also requires institutions to answer garnishment orders in a way that identifies exempt and non-exempt funds, limits liability for institutions that comply with process, and provides for CPI-U-based indexing every three years beginning in 2027. The bill also makes conforming changes to Virginia’s homestead exemption procedures and directs the Department of Planning and Budget to supply updated dollar amounts to the Virginia Code Commission.
The available voting history indicates favorable sentiment toward the bill. It was recommended by a subcommittee unanimously, reported from the House Committee on Courts of Justice by a wide margin, and passed the House with strong support. The lack of recorded committee discussion prevents a detailed read on arguments, but the vote totals suggest the bill was viewed as a modest, practical consumer-protection measure rather than a controversial overhaul of garnishment law.
The likely areas of contention are the size of the automatic exemption, the administrative duties imposed on depository institutions, and the interaction with existing exemption law. Creditors may object that the automatic protection reduces recoverable assets and complicates garnishment enforcement, while banks and credit unions may be concerned about operational compliance. Debtors’ advocates may support the bill but could argue that $500 is insufficient given current living costs, even with future CPI adjustments. The bill’s text also raises technical questions about how the automatic exemption is allocated against homestead exemptions and other state or federal exemptions.