PCS Legal Remedies & Court Proceedings 2 — Questions and Answers
Question 1: Under the Consumer Credit Protection Act (CCPA), the maximum amount of disposable earnings that may be garnished per week is generally:
- 10% of disposable earnings
- 25% of disposable earnings or the amount by which earnings exceed 30 times the federal minimum wage, whichever is less (Correct answer)
- 50% of disposable earnings
- The entire paycheck if the debt is over $5,000
Correct answer: 25% of disposable earnings or the amount by which earnings exceed 30 times the federal minimum wage, whichever is less
The CCPA limits garnishment to the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage.
Question 2: A bank levy in debt collection allows a judgment creditor to:
- Place a lien on the debtor's home
- Seize funds directly from the debtor's bank account (Correct answer)
- Intercept the debtor's tax refund
- Garnish the debtor's wages
Correct answer: Seize funds directly from the debtor's bank account
A bank levy (also called a bank attachment) allows a judgment creditor to have funds frozen and seized directly from the debtor's bank accounts to satisfy the judgment.
Question 3: A judgment lien gives a creditor the right to:
- Garnish up to 50% of the debtor's wages
- Claim an interest in the debtor's real property that must be paid upon sale or refinance (Correct answer)
- Immediately liquidate the debtor's personal belongings
- Report the debtor to all three credit bureaus
Correct answer: Claim an interest in the debtor's real property that must be paid upon sale or refinance
A judgment lien attaches to real property owned by the debtor, ensuring the creditor is paid from the proceeds when the property is sold or refinanced.
Question 4: How long are civil judgments typically valid before they may need to be renewed to remain enforceable?
- 1 year
- 3 years
- 5 to 10 years, depending on state law (Correct answer)
- 20 years regardless of state
Correct answer: 5 to 10 years, depending on state law
Judgment validity periods vary by state, commonly ranging from 5 to 10 years, after which the creditor may need to renew the judgment to continue enforcement efforts.
Question 5: A judgment debtor examination (debtor's exam) is a court proceeding in which:
- The debtor is examined by a credit bureau to update their file
- The creditor questions the debtor under oath about their assets and finances to aid in collection (Correct answer)
- A judge determines whether a debt is valid
- The debtor challenges the judgment in front of an appellate court
Correct answer: The creditor questions the debtor under oath about their assets and finances to aid in collection
A judgment debtor exam is a post-judgment discovery tool where the creditor questions the debtor under oath about their income, assets, and financial situation to identify collectible assets.
Question 6: Which type of income is generally exempt from federal wage garnishment laws?
- Overtime pay
- Commission income
- Social Security benefits for most consumer debts (Correct answer)
- Hourly wages
Correct answer: Social Security benefits for most consumer debts
Social Security benefits are generally exempt from garnishment for most consumer debts under federal law, though they may be subject to garnishment for certain government debts like taxes or student loans.
Question 7: An abstract of judgment is a document that:
- Summarizes the debtor's credit history
- Creates a lien on real property in the county where it is recorded (Correct answer)
- Notifies credit bureaus of a court verdict
- Orders a bank to freeze the debtor's accounts
Correct answer: Creates a lien on real property in the county where it is recorded
An abstract of judgment is a condensed record of a court judgment that, when recorded with the county, creates a lien on any real property the debtor owns in that county.
PCS Legal Remedies & Court Proceedings 2
Under the Consumer Credit Protection Act (CCPA), the maximum amount of disposable earnings that may be garnished per week is generally: