Consumer Credit Protection Act

Passed in 1968, the Consumer Credit Protection Act (CCPA) protects employees from being discharged by their employers when their wages have been garnished and limits the amount of employees’ earnings which may be garnished per week. Garnishment is the seizing of a person’s property, wages, or money to satisfy a judgment. Generally creditors use garnishment as a last resort to gain payment from people they are owed money. Frequently there are few ASSETS available to garnish, aside from wages.
Employee earnings include salaries, commissions, bonuses, and INCOME from pension or retirement programs. The CCPA limits the amount a creditor can garnish to 25 percent of the debtor’s weekly disposable income or the amount by which the person’s weekly take-home income exceeds 30 times the current federal MINIMUM WAGE. The smaller of the two choices is the limit on the amount that can be garnished. In court orders for child support or alimony, the CCPA allows up to 50 percent of an employee’s disposable earnings to be garnished. Disposable income is defined under the act as income after deductions for taxes, SOCIAL SECURITY payments, and state retirement-system contributions.
The CCPA is administered and enforced by the Employment Standards Administration’s Wage and Hourly Division, a division of the U.S. DEPARTMENT OF LABOR. Violations of the CCPA may result in reinstatement of a discharged employee with back pay and the restoration of garnished amounts. Employers who willfully violate the discharge provisions of the law may be prosecuted and subject to up to a $1,000 fine and imprisonment of up to one year, or both.
The Consumer Credit Protection Act applies to all states, but states are allowed to pass laws that eliminate garnishment, and many have. Often employers have fired workers whose earnings have been garnished, citing the added bookkeeping expense associated with complying with a judgment. The law allows states to prohibit firing of employees whose wages have been garnished.
The FAIR DEBT COLLECTION PRACTICES ACT (1977), an amendment to the Consumer Credit Protection Act, defines forbidden debt-collection practices, including harassment, false or misleading representation, and other unfair practices.