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14.2.1.1 Purposes of Consumer Credit Protection Act Wage Garnishment Restrictions

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  6. 14.2.1.1 Purposes of Consumer Credit Protection Act Wage Garnishment Restrictions

14.2.1.1 Purposes of Consumer Credit Protection Act Wage Garnishment Restrictions

About four million workers—3% of all workers in the country—suffer wage garnishment annually for consumer debts.1 The primary limitation on these garnishments is the federal Consumer Credit Protection Act (CCPA),2 which exempts a portion of a worker’s earnings from garnishment and prohibits an employer from firing a worker due to garnishment resulting from a single indebtedness. Prior to these federal protections, state law provided debtors few protections from garnishment abuses.3

Congress enacted the CCPA garnishment provisions, effective in 1970, as a means to “relieve countless honest debtors driven by economic desperation from plunging into bankruptcy in order to preserve their employment and insure a continued means of support for themselves and their families.”4 The statute lists three purposes for its garnishment restrictions:

  • • Reduction of predatory extensions of credit;
  • • Increased job stability; and
  • • Increased uniformity in bankruptcy laws and protections.5

The CCPA’s wage garnishment protections are intended to be self-executing and need not be affirmatively asserted by the debtor.6 The statute and regulations are reprinted in Appendix D, infra.

In 2016, the Uniform Law Commission (formerly the National Conference of Commissioners on Uniform State Laws or NCCUSL) approved a Uniform Wage Garnishment Act. Though it is intended to make wage garnishment law more uniform and has some features that help consumers, the uniform act fails to increase the amount of wages protected or address the need to protect deposited wages. It also carries the danger that it will be used in state legislatures as a vehicle to roll back existing state protections that go beyond the federal minimum. The model act is available on the Uniform Law Commission’s website.7 NCLC has prepared model pro-consumer amendments to the Uniform Wage Garnishment Act.8 In addition, NCLC’s Model Family Financial Protection Act9 includes strong model provisions to protect wages from garnishment. A 2019 NCLC report reviews and rates the wage garnishment protections in the fifty states, the District of Columbia, and the Virgin Islands.10

Footnotes

  • 1 ADP Research Inst., Garnishment: The Untold Story (2014), available at www.adp.com; Paul Kiel, ProPublica, Unseen Toll: Wages of Millions Seized to Pay Past Debts (Sept. 15, 2014), available at www.propublica.org.

  • 2 15 U.S.C. §§ 1671–1677, reprinted in Appx. D.1, infra. See Annotation, Validity, Construction and Application of Secs. 301–307 of Consumer Credit Protection Act (15 U.S.C.S. Secs. 1671–1677) Placing Restrictions on Garnishment of Individuals’ Earnings, 14 A.L.R. Fed. 447 (1973).

  • 3 W. Douglas, Points of Rebellion 48 (1970) (“[T]oday’s garnishment proceedings are as destructive and vicious as the debtors’ dungeons. . . . In many states the percentage of wages garnished has been so high that a man and his family are often reduced to a starvation level.”).

    One proposal would have completely abolished garnishment. H.R. 1040, 90th Cong. (1968), reprinted in 1968 U.S.C.C.A.N. 1978. See also § 14.2.1.4.5, infra (some states ban wage garnishment).

  • 4 H.R. Rep. No. 1040, 90th Cong. (1968), reprinted in 1968 U.S.C.C.A.N. 1979.

  • 5 15 U.S.C. § 1671(a)(3). See also Brown v. Liberty Loan Corp., 392 F. Supp. 1023, 1032 (M.D. Fla. 1974) (federal garnishment restrictions were directed “towards abuses of garnishment procedures by consumer financial lenders, such as loan companies”), rev’d on other grounds, 539 F.2d 1355 (5th Cir. 1976).

  • 6 United States v. France, 782 F.3d 820, 824 (7th Cir. 2015), vacated, 136 S. Ct. 583 (2015) (vacating judgment based on Solicitor General’s confession of error in brief for the Supreme Court); U.S. Dep’t of Justice, Office of Solicitor General, Brief for the United States No. 15-24 (filed Nov. 6, 2016), available at www.justice.gov; U.S. Dep’t of Labor, Wage & Hour. Div., Field Operations Handbook Ch. 16, § 16a06, available at www.dol.gov.

  • 7 Unif. Law Comm’n, available at www.uniformlaws.org.

  • 8 National Consumer Law Center, Model Consumer Amendments to Uniform Wage Garnishment Act (Jan. 17, 2017) available at www.nclc.org.

  • 9 National Consumer Law Center, Model Family Financial Protection Act (updated May 2019), available at www.nclc.org.

  • 10 National Consumer Law Center, No Fresh Start in 2019: How States Still Allow Debt Collectors to Push Families into Poverty (Nov. 2019), available at www.nclc.org.