Arizona voters pass Predatory Debt Collection Protections Act

On November 8, 2022, Arizona voters passed Arizona Proposition 209, titled the Healthcare Debt Interest Rate Limit and Debt Collection Exemptions Initiative. The initiative passed by a wide margin of 72.01% to 27.99%. Prop. 209 modifies several of Arizona’s statutory exemptions, including the wage garnishment exemption, which is discussed in this article.

It also establishes a cap on the amount of interest that can be charged on medical and nonmedical debts and judgments. For those of you surprised by the breadth of Prop 209 (as I just described), juxtaposed to its title and how it was portrayed leading up to the election, you’re not alone. Employers (as potential garnishees) should understand the new provisions of the law and how they apply to garnishments, as failure to properly garnish wages can result in severe liability against employers.

What is the effective date of Proposition 209?

The Arizona Constitution provides that Governor Doug Ducey has until 30 days after the date of the election to issue a proclamation declaring that the Prop. 209 ballot measure received a majority vote and is now law. Once he does this, the law becomes effective immediately.

At the time of writing, Governor Ducey hasn’t issued such a proclamation. It’s anticipated he will do this on December 8, 2022.

Does Proposition 209 apply to existing wage garnishments?