APA Garnishments & Wage Deductions 2

Question 1

Under the Debt Collection Improvement Act (DCIA), what is the maximum percentage of disposable pay that can be garnished for a federal student loan in default?

Accepted Answer

15%

Answer

10%

Answer

20%

Answer

25%

Question 2

When an employer receives an Income Withholding Order (IWO) for child support, within how many business days must the first withholding typically begin under the model federal form?

Accepted Answer

On the first pay date occurring 14 or more days after receipt

Answer

Immediately upon receipt

Answer

Within 7 business days

Answer

Within 30 days

Question 3

Filing for Chapter 7 bankruptcy generally triggers an automatic stay. Which type of garnishment is typically NOT stopped by the bankruptcy automatic stay?

Accepted Answer

Domestic support obligations (child support/alimony)

Answer

Creditor wage garnishment

Answer

Student loan administrative wage garnishment

Answer

State tax levy

Question 4

An employer charges a $5 administrative fee per pay period for processing a child support income withholding order. How should this fee be applied?

Accepted Answer

Applied only if state law permits it; fee comes from the employee's remaining wages

Answer

Added on top of the withheld child support amount paid to the state disbursement unit

Answer

Deducted from the employee's wages in addition to the withheld support

Answer

Paid by the custodial parent, not the employee

Question 5

When an employer receives a tax levy from the IRS under a Form 668-W, what must the employer give the employee immediately?

Accepted Answer

A copy of the levy notice and Publication 1494 exemption statement

Answer

A termination letter

Answer

A Form W-2 for the current year

Answer

A copy of the employer's garnishment policy

Question 6

What is the correct order of priority when an employee has simultaneous federal tax levy, child support withholding order, and creditor garnishment?

Accepted Answer

Child support → Tax levy → Creditor garnishment

Answer

Tax levy → Child support → Creditor garnishment

Answer

Creditor garnishment → Child support → Tax levy

Answer

Tax levy → Creditor garnishment → Child support

Question 7

A voluntary wage assignment differs from a court-ordered garnishment in that:

Accepted Answer

A wage assignment is agreed to by the employee; a garnishment is compelled by legal process

Answer

A wage assignment requires a court order while a garnishment does not

Answer

A wage assignment is capped at 10% while a garnishment is capped at 25%

Answer

Employers are never required to honor voluntary wage assignments