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14.2.1.3 Types of Debts to Which the Protections Apply

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  3. Chapter 14 Protecting Debtors’ Wages, Benefits, Other Income, and Bank Accounts
  4. 14.2 Protection of Debtors’ Wages
  5. 14.2.1 Federal Wage Garnishment Protections
  6. 14.2.1.3 Types of Debts to Which the Protections Apply

14.2.1.3 Types of Debts to Which the Protections Apply

The CCPA wage garnishment protections are not limited to consumer debts or debts incurred through credit transactions, but apply to garnishment to collect “any debt.”26 Thus, they apply to debts incurred for business as well as consumer purposes.27 One court, however, held that the CCPA did not limit the amount of the attachment of the salary of a polluter to pay the weekly cost of pumping and hauling sewage from his property after he was found in contempt for failure to comply with an order to pump and haul it. The court held that the order requiring him to pay for the cleanup was not a judgment, so the CCPA did not apply.28

The CCPA protections apply to wage garnishment orders to collect fines and restitution awards in federal criminal prosecutions.29 However, one court held that the CCPA garnishment provisions did not apply to a state’s suit seeking reimbursement for the cost of incarceration from a prisoner’s accumulated disability pension payments.30 The court did not articulate a rationale, other than the belief that the CCPA was not intended to apply to garnishment for this purpose.

While the CCPA protections do not apply to actions to collect state or federal taxes,31 the Internal Revenue Code itself exempts a portion of income from seizure that may be more generous than the CCPA for families and less generous for individuals without dependents.32 One court, however, has held that the provision in the CCPA protecting employees from job termination for their first garnishment applies to an Internal Revenue Service levy on wages.33

The state garnishment statute may limit wage garnishment to debts that have gone to judgment. In such a case, a ruling that does not have all the formalities of a final judgment may be insufficient.34 Prejudgment garnishment may also run afoul of the Supreme Court’s due process rulings that require prior notice and an opportunity to be heard.35

Footnotes

  • 26 15 U.S.C. § 1672(c).

  • 27 Midlantic Nat’l Bank/North v. Reif, 732 F. Supp. 354 (E.D.N.Y. 1990); In re Fairweather, 515 B.R. 208 (Bankr. D. Md. 2014) (applying CCPA garnishment limitations to garnishment resulting from guarantee of commercial debt; each subchapter of CCPA has its own definitions section, so FDCPA definition of debt not applicable to garnishment subchapter).

  • 28 Friends of the Sakonnet v. Dutra, 125 B.R. 69 (D.R.I. 1991) (CCPA not meant to be used by polluters to avoid court orders to comply with federal and state environmental laws).

  • 29 18 U.S.C. § 3613(a)(3). See United States v. Lee, 659 F.3d 619 (7th Cir. 2011) (payments from retirement accounts were earnings within the meaning of CCPA; garnishment for criminal fine was limited to 25%); United States v. Thomas, 2012 WL 147876 (E.D. Cal. Jan. 18, 2012) (CCPA garnishment limits apply to criminal court’s restitution order), adopted by 2012 WL 869512 (E.D. Cal. Mar. 9, 2012); United States v. Johnson, 2009 WL 1033773 (E.D. La. Apr. 15, 2009). See also United States v. Otto, 2012 WL 2529406 (W.D.N.C. June 29, 2012) (applying 25% CCPA limit to garnishment of pension payments for criminal restitution). But see United States v. Wells, 2015 WL 13685242 (D. Alaska Jan. 21, 2015) (concluding that All Writs Act gives court authority to order seizure of more than 25% of convicted murderer’s monthly retirement and disability payments to pay restitution while he is incarcerated regardless of CCPA); United States v. Cunningham, 866 F. Supp. 2d 1050 (S.D. Iowa 2012) (state employees’ disability retirement payments are earnings, subject to 25% cap of CCPA, but court may issue order pursuant to All Writs Act ordering state to pay remaining 75% of payments as restitution while defendant is incarcerated). See generally §§ 11.4, 13.4.2.2, supra.

  • 30 State Treasurer v. Gardner, 583 N.W.2d 687 (Mich. 1998).

  • 31 15 U.S.C. § 1673(b). See United States v. Clayton, 613 F.3d 592 (5th Cir. 2010) (CCPA limits inapplicable to order that defendant convicted of failing to file income tax returns make restitution to IRS).

  • 32 26 U.S.C. § 6334(d) provides for weekly exemption of the standard deduction provided by 26 U.S.C. § 63(c) and the deduction provided for personal exemptions in 26 U.S.C. § 151, divided by 52. Other exemptions are provided by 26 U.S.C. § 6334, including exemption of many government benefits and specified personal property. See generally §§ 13.4.2.1–13.4.2.3, supra.

  • 33 Martin v. Hawkeye Int’l Trucks, Inc., 782 F. Supp. 1320 (S.D. Iowa 1991).

  • 34 See, e.g., Dyer v. Schwan’s Home Serv., Inc., 92 N.E.3d 116 (Ohio Ct. App. 2017) (garnishment improper where court issued a judgment entry recording a jury verdict but had not resolved a motion for prejudgment interest; must be final, appealable order).

  • 35 Sniadach v. Family Fin. Corp., 395 U.S. 337, 89 S. Ct. 1820, 23 L. Ed. 2d 349 (1969) (finding prejudgment garnishment of worker’s wages unconstitutional because of lack of prior notice and opportunity to be heard). See generally § 13.5, supra.