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Collection Actions: DELAWARE

Has state opted out of federal bankruptcy exemptions? Yes. Del. Code Ann. tit. 10, § 4914.

Is opt out limited to residents or domiciliaries of the state? Yes. Del. Code Ann. tit. 10, § 4914: “[A]n individual debtor domiciled in Delaware is not authorized or entitled to elect the Federal exemptions . . . [in § 522(d)] and may exempt only that property from the estate as set forth is subsection (b) of this section.”

Do state’s exemptions have extraterritorial application?

Collection Actions: HAWAII

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Homestead: No. Haw. Rev. Stat. § 651-92(a)(1) applies to one parcel of real property “in the state of Hawaii.”

Personal property: Uncertain.

Wages: Haw. Rev. Stat. §§ 652-1(a), (b), 651-121, 653-3.

Collection Actions: MAINE

Has state opted out of federal bankruptcy exemptions? Yes. Me. Rev. Stat. Ann. tit. 14, § 4426.

Is opt out limited to residents or domiciliaries of the state? Not specified. Me. Rev. Stat. Ann. tit. 14, § 4426: “[A] debtor may exempt from property of the debtor’s estate under [Title 11], only that property exempt under [11 U.S.C. § 522(b)(2)(A) and (B)].”

Do state’s exemptions have extraterritorial application?

Homestead: Uncertain.

Personal property: Uncertain.

Collection Actions: MARYLAND

Has state opted out of federal bankruptcy exemptions? Yes. Md. Code Ann., Cts. & Jud. Proc. § 11-504 (West).

Is opt out limited to residents or domiciliaries of the state? Not specified, but probably not. Md. Code Ann., Cts. & Jud. Proc. § 11-504 (West): “In any bankruptcy proceeding, a debtor is not entitled to the federal exemptions provided by § 522(d) of the federal Bankruptcy Code.” See In re Brooks, 393 B.R. 80 (Bankr. M.D. Pa. 2008) (Maryland opt-out statute is not limited to domiciliaries).

Collection Actions: MICHIGAN

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Homestead: Uncertain.

Personal property: Uncertain.

Wages: Mich. Comp. Laws § 600.5311.

Scope: Wages.

Collection Actions: MINNESOTA

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Homestead: Yes. See In re Drenttel, 403 F.3d 611 (8th Cir. 2005).

Personal property: Not specified in exemption statute, but probably yes based on In re Drenttel, 403 F.3d 611 (8th Cir. 2005).

Collection Actions: MONTANA

Has state opted out of federal bankruptcy exemptions? Yes. Mont. Code Ann. § 31-2-106.

Is opt out limited to residents or domiciliaries of the state? Not specified. Mont. Code Ann. § 31-2-106: “An individual may not exempt from the property of the estate in any bankruptcy proceeding the property specified in [§ 522(d)].”

Do state’s exemptions have extraterritorial application?

Homestead: Uncertain.

Personal property: Uncertain.

Collection Actions: NEW JERSEY

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Homestead: No exemption.

Personal property: Uncertain.

Wages: N.J. Stat. Ann. §§ 2A:17-1, 2A:17-50, 2A:17-56, 2A:17-56.9, 2A:17-56.12 (West).

Collection Actions: NEW YORK

Has state opted out of federal bankruptcy exemptions? No. Although N.Y. Debt. & Cred. Law § 284 (McKinney) provides that debtors domiciled in New York are not permitted to use the federal exemptions under section 522(d) of the Bankruptcy Code, and this provision has not been repealed, a more recent statute, N.Y. Debt. & Cred. Law § 285 (McKinney), provides that an individual debtor in a bankruptcy case may opt to use the exemptions provided under section 522(d) of the Bankruptcy Code in lieu of New York exemptions.

Collection Actions: RHODE ISLAND

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Collection Actions: OHIO

Has state opted out of federal bankruptcy exemptions? Yes. Ohio Rev. Code Ann. § 2329.662 (West).

Is opt out limited to residents or domiciliaries of the state? Yes. Ohio Rev. Code Ann. § 2329.662 (West): “[T]his state specifically does not authorize debtors who are domiciled in this state to exempt the property specified in [§ 522(d)].”

Do state’s exemptions have extraterritorial application?

Collection Actions: SOUTH DAKOTA

Has state opted out of federal bankruptcy exemptions? Yes. S.D. Codified Laws §§ 43-31-30, 43-45-13.

Is opt out limited to residents or domiciliaries of the state? Yes. S.D. Codified Laws §§ 43-31-30, 43-45-13: “Residents of this state are not entitled to [§ 522(d) exemptions], exemptions which this state specifically does not authorize.” See In re Volk, 26 B.R. 457 (Bankr. D.S.D. 1983).

Do state’s exemptions have extraterritorial application?

Collection Actions: WASHINGTON

Has state opted out of federal bankruptcy exemptions? No.

Is opt out limited to residents or domiciliaries of the state? Not applicable.

Do state’s exemptions have extraterritorial application?

Homestead: Uncertain.

Personal property: Uncertain.

Wages: Wash. Rev. Code §§ 6.27.010, 6.27.150, 6.27.170.

Collection Actions: 15.2.4 Relation Between Federal and State Wage Garnishment Protections

The federal Consumer Credit Protection Act (CCPA) explicitly provides that its garnishment restrictions do not limit the operation of state laws that exempt a larger share of a debtor’s wages from garnishment.208 Nor does the CCPA limit the operation of any state laws that prohibit employee discharge in cases in which the CCPA does not prohibit discharge.209 Congress enacted the CCPA to create a minimum level of debtor protections, only preempting state law that is less protective of debtors

Collection Actions: 15.2.1.5.1 Calculation rules

The CCPA garnishment provisions set a ceiling on the amount of a debtor’s disposable earnings that may be garnished. This subsection discusses these rules. State restrictions on garnishment, discussed in § 15.2.3, infra, should be also checked in every case, as many provide greater protection for the debtor.73

Collection Actions: 15.2.2.2 Garnishment of Federal Employees’ Wages; Salary Offset

Sovereign immunity protected federal government employees from garnishment145 until 1994, when Congress authorized garnishment of the paychecks of civilian and military federal employees.146 That law provides that the CCPA protections, and any more protective state exemptions, are available to federal employees.147 This statute does not, however, authorize the garnishment of federal pension benefits.148

Collection Actions: 15.2.1.4.1 Wages, vacation pay, sick pay

The CCPA garnishment provisions protect consumers from garnishment of “earnings,” defined as “compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.”36 The key question under this and similar state laws is whether payments are compensation “for personal services.”37 For example, accounts receivable may be protected under the CCPA and similar state st

Collection Actions: 15.2.1.6.2 Criminal and administrative enforcement

The CCPA provides criminal sanctions for wrongful discharge of an employee.107 The CCPA also provides that its garnishment restrictions are to be enforced by the Secretary of Labor acting through the Wage and Hour Division of the Department of Labor.108 The Secretary of Labor has the authority to seek injunctive and declaratory relief109 and the reinstatement of a wrongfully discharged employee.110

Collection Actions: 15.2.5 Wage Assignments

Wage assignments—contractual clauses by which a worker assigns their wages to a creditor or some other entity—can affect debtors in ways similar to wage garnishments. While the CCPA wage garnishment limits do not apply to wage assignments,218 the Federal Trade Commission’s Credit Practices Rule prohibits wage assignments in connection with the extension of credit to consumers in or affecting commerce.219

There are three exceptions, however. A wage assignment is allowed if:

Collection Actions: 15.2.1.5.2 Wage garnishment calculations

After July 23, 2009, with a minimum wage of $7.25 per hour in effect, no garnishment can be made if an employee’s disposable earnings are $217.50 or less for the week in question. When an employee’s disposable earnings exceed $217.50, but are less than $290.00, only the amount over $217.50 can be garnished. For example, assume that an employee’s gross earnings in a particular week are $250.00. After deductions required by law, the disposable earnings are $220.00.

Collection Actions: 15.2.1.4.2 Periodic pension plan payments

The CCPA is explicit that “periodic payments pursuant to a pension or retirement program” constitute “earnings” protected by its garnishment limits.43 The language “pursuant to” refers to payments from the pension plan to a retiree, rather than payments by the employer or employee into the pension plan.44 However, wage garnishment protections may not prevent a creditor from reaching the fund itself, as opposed to the periodic payments it makes, to the extent the retiree is entitled