Garnishments & Levies Flashcards
7 cards from real CPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Garnishments & Levies flashcards as text
Which federal law governs the maximum amount that can be withheld from an employee's wages for a creditor garnishment?
Answer: Consumer Credit Protection Act (CCPA)
Title III of the Consumer Credit Protection Act (CCPA) sets federal limits on wage garnishment amounts and prohibits discharge of employees for a single garnishment.
Under the CCPA, the maximum garnishable amount for ordinary consumer debt is the lesser of two figures. What are they?
Answer: 25% of disposable earnings OR the amount by which disposable earnings exceed 30 times the federal minimum hourly wage
The CCPA limits ordinary garnishments to the lesser of 25% of disposable earnings or the amount exceeding 30 times the federal minimum wage per week.
How are 'disposable earnings' defined for federal wage garnishment purposes?
Answer: Earnings remaining after legally required deductions such as taxes and Social Security
Disposable earnings are the portion of wages remaining after legally required deductions (taxes, Social Security, Medicare, state unemployment insurance) are subtracted; voluntary deductions do not reduce disposable earnings.
Which type of garnishment order generally takes priority over all other garnishments when received simultaneously?
Answer: Child support and alimony income withholding orders
Child support and alimony income withholding orders carry statutory priority under federal law and must be satisfied before most other garnishment types.
What is an IRS wage levy?
Answer: The IRS's legal seizure of wages to satisfy an unpaid federal tax debt
An IRS wage levy is a legally enforceable seizure of an employee's wages to satisfy an outstanding federal tax liability, and it continues until the debt is paid or released.
Under federal law, an employer is prohibited from discharging an employee whose wages are garnished for:
Answer: A single debt, but not for multiple simultaneous garnishments
The CCPA protects employees from termination when their wages are subject to garnishment for one debt, but this protection does not extend to employees garnished for two or more separate debts.
Upon receiving a valid garnishment order, what is the employer's initial required action?
Answer: Notify the employee and begin withholding as directed by the order
Employers must notify the affected employee that a garnishment order has been received and begin withholding in accordance with the order's terms in a timely manner.