Question

Geraldine Wolfe is a supervisor at Fantastigifts. She has an annual salary of $45,000, paid biweekly, and a garnishment for consumer credit of $375. Assuming that her disposable income is 80 percent of her gross pay per period, does the garnishment follow the CCPA ( Consumer Credit Protection Act)? If not, what is the maximum garnishment allowed for Geraldine’s consumer credit garnishment?

Answer 1

The consumer credit protection act was inacted to protect employee from discharge by the employer in case there wage has been garnished in any one debt. However the provision has provided for some limit till which the garnishment can be done. The provision applies to all who receive earning for their personal services. The provision says the credit would be lesser of 25% of disposable income or by the amount which is greater than 30 times of minimum hourly wages (i.e $7.25).

Here in this case Geraldine Wolfe was paid biweekly and 80% was his disposable income. So the calculation would be as follow with 52 weeks in a year.

Disposable income = ($45000/52)*2*80%=$1385 (round off to nearest dollar)

25% of disposable income= $346.25 ($1385*25%)

With minimum wage of $7.25= $7.25*60 (biweekly)=$435

so the amount which is greater than the minimum hourly wage is =$1385-$435=$950

Conclusion:- So the maximum wage garnishment can be lesser of $ 346.25 or $950. Hence it will be $346.25 which is the maximum garnishment allowed for Geraldine's consumer credit garnishment.