On April 13, Virginia enacted Chapter 638 (S 301), amending the state’s garnishment statutes to establish new account-balance protections and automatic exemptions for certain benefit payments. The law requires financial institutions, upon receipt of a garnishment summons, to examine all accounts of the judgment debtor and to exempt a minimum protected balance of up to $1,000 in combined funds (subject to adjustment for inflation every three years). The financial institution must ensure that account holders retain full and customary access to this protected balance. If the total funds across all of a debtor’s accounts exceed the minimum protected threshold, the financial institution must conduct an “account review” to determine whether any federal or state benefit payments were deposited in the debtor’s account during the preceding two months. The law limits financial institutions to a single account review per garnishment summons, with any new or subsequent summons triggering a new review.

Qualifying benefit payments include Social Security, veterans’ benefits, federal civil service retirement benefits, Railroad Retirement Board benefits, unemployment compensation, public assistance, workers’ compensation, and child support payments. The total of such deposits constitutes a “protected amount” that is automatically exempt from garnishment, provided the financial institution can identify the payments based on information transmitted by the payer. Financial institutions must ensure the account holder retains full access to exempted funds and must issue a notice to the account holder in accordance with 31 C.F.R. § 212.7 once the protected amount is established. If an account holder maintains multiple accounts, the institution must conduct a separate review of each account and calculate a distinct protected amount for each. Only funds exceeding the combined total of the minimum protected account balance and the protected amount are subject to garnishment. The law further provides that these automatic exemption provisions do not limit the debtor’s ability to claim additional exemptions and do not apply where exemption is prohibited under existing law.