Question

Geraldine Wolfe is a supervisor at Fantastigifts. She has an annual salary of $45,500, paid biweekly, and a garnishment for consumer credit of $435. Assuming that her disposable income is 80 percent of her gross pay per period, does the garnishment follow the CCPA? If not, what is the maximum garnishment allowed for Geraldine’s consumer credit garnishment? (Round your intermediate calculations and final answer to 2 decimal places.)

1. Does the garnishment follows the CCPA?

2. Maximum garnishment allowed:

Answer 1

Garnishment of Wages takes place when the court orders to deduct the wages to satisfy a debt before paying it to the employee. CCPA protects the rights of employees and limits the garnishment for any employee

Below are the two conditions given in the consumer credit protection Act (CCPA): It is at lesser of the 2 conditions given below:

1) 25% of disposable income if the disposable income.

2) Any amount that is greater than 30 times federal minimum hourly wage. Federal minimum wage is $7.25 per hour. i.e. $217.50

Geraldine's biweekly pay period = 45,500/26 = 1,750; Her disposable income at 80% is $1,400 (.80*1750)

Consumer credit is allowed a maximum garnishment of 25% = $350 per pay period.

Amount of Income that is greater than 30 times federal federal minimum wage = $1400- 217.50 = $1182.50. Since 25% of Income $350 is less than $1182.50, maximum garnishment amount allowed is $350

Hence the amount of garnishment exceeds the allowable limit.