One of my clients is facing wage garnishment by a judgment creditor because the client is not head of household. The amount that can be garnished from his wages is set forth by the federal wage garnishment law under Title III of the Consumer Credit Protection Act (CCPA). My client initial understanding of the federal garnishment limits was incorrect, and other of my clients have made the same error.
The CCPA limits wage garnishments to the greater of 25% of the judgment debtors disposable earnings or 30 times the current federal minimum wage. (Currently $7.25/hr). Disposable earnings means the debtor’s gross salary reduced by legally required deductions. Required deductions includes taxes, unemployment insurance, and social security as well as retirement withholdings required by an applicable law.
My client earned about $1,500 per week, and after legally required deductions he took home about $1,200 per week. He worked 40 hours per week. Based on those numbers his creditor could take about $300 per week from a wage garnishment. My client told me that his garnishment protection is greater if computed under the minimum wage test. He figured that 30 times the current minimum wage is $217.50. He multiplied $217.50 times his hours worked (40) and decided he could protect $8,700 per week from garnishment. (7.25 x 30 x 40 hours).
If this client’s method really worked almost nobody in the U.S. would ever suffer from a wage garnishment. Few of us take home more than $8,700 per week, or about $452,000 per year. Clearly, the 30 times minimum wage is a total periodic exemption amount and not an hourly amount. The federal minimum wage ceiling or wage garnishment is $217.50. This is less than the amount equal to 25% of my client’s disposable earnings. In this case, the judgment creditor could garnish $300 of my client’s weekly income.
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