On July 1^st of this year, Virginia’s garnishment laws changed to include new requirements for financial institutions.  I’ve received numerous inquiries about these updates and the following is a summary of what’s new.

Automatic Exemptions

Judgment debtors no longer must file a claim for exemption to receive the automatic exemptions in the law, which include certain federal and state benefits, assistance payments, child support, and a minimum protected balance.  As the name implies, banks are required to automatically exempt the “Automatic Exemptions Under Federal and State Law” found in § 8.01-512.4, among other statutes.  Judgment debtors also maintain the right to claim additional exemptions through the existing judicial process.

Minimum Protected Account Balance

When the bank receives a garnishment summons, it has a duty to identify all accounts owned by the judgment debtor and to perform an examination of those accounts.  If the combined balance of all the debtor’s accounts at the bank does not exceed $1,000, the entire amount is protected as the new “minimum protected account balance,”[1] and garnishment is not permitted. The minimum protected account balance is indexed in the law and will adjust every three years to reflect the change in the Consumer Price Index.

Account Review

The account review is not new, but the bank doesn’t even perform the account review if its initial examination reveals the minimum protected account balance is not met.[2]  If, however, the debtor’s combined balances in all accounts exceeds $1,000, the bank must conduct an account review.  Also unchanged is that the law requires one account review by the bank per receipt of a garnishment summons.  In an account review, the bank looks for protected benefit payments deposited into the debtor’s account within the two months immediately preceding the day before the bank conducts the account review. If qualifying protected benefit payments were deposited during the lookback period, the bank calculates the total amount of those benefit deposits. That amount becomes the “protected amount” and is automatically exempt from garnishment. If the judgment debtor maintains more than one account at the bank, a separate account review must be made for each account and, if applicable, a separate and distinct protected amount shall be calculated and established for each account. The bank must identify only those benefit payments it can recognize from the electronic payment information transmitted from the payer of such benefit payment.[3]

During the 2026 General Assembly Session, the VBA raised the issue that banks cannot identify benefits payments without some payment identifier, as used with federally protected payments, and requested a workgroup with the Virginia Department of the Treasury.  The Treasury recently held a well-attended workgroup meeting  with financial institutions and Virginia agencies to discuss the potential need for identifiers on agency benefit payments.  There is a continuing opportunity for you and your institutions to share additional information and feedback to assist in informing the ongoing implementation. If there is specific information or nomenclature that the agencies or their third-party vendors should include in the protected payments to make them easily identifiable, please send those suggestions to me at djohnston@vabankers.org.  In addition, if there are other considerations the VBA should include in the discussions, questions that need additional clarification, or other items for either Treasury or the paying entities, please let us know.