CPS Garnishments & Levies

Question 1

Which federal law governs the maximum amount that can be withheld from an employee's wages for a creditor garnishment?

Accepted Answer

Consumer Credit Protection Act (CCPA)

Answer

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.

Question 2

Under the CCPA, the maximum garnishable amount for ordinary consumer debt is the lesser of two figures. What are they?

Accepted Answer

25% of disposable earnings OR the amount by which disposable earnings exceed 30 times the federal minimum hourly wage

Answer

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.

Question 3

How are 'disposable earnings' defined for federal wage garnishment purposes?

Accepted Answer

Earnings remaining after legally required deductions such as taxes and Social Security

Answer

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.

Question 4

Which type of garnishment order generally takes priority over all other garnishments when received simultaneously?

Accepted Answer

Child support and alimony income withholding orders

Answer

Child support and alimony income withholding orders carry statutory priority under federal law and must be satisfied before most other garnishment types.

Question 5

What is an IRS wage levy?

Accepted Answer

The IRS's legal seizure of wages to satisfy an unpaid federal tax debt

Answer

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.

(CPS) Certified Payroll Specialist Practice Test

(CPS) Certified Payroll Specialist Practice Test

CPS Garnishments & Levies