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How Much Can Creditors Collect From Debtors Through Wage Garnishment?

Posted on in Debt Collection

b2ap3_thumbnail_shutterstock_1981093034.jpgWhen debtors fail to repay the debts they owe, creditors have a number of options for collecting these debts. If a creditor is able to secure a judgment against a debtor, they may then take action to pursue repayment of the debt. One of the best ways of doing so is through wage garnishment. By having a certain amount deducted from the debtor’s wages on an ongoing basis, a creditor will receive regular payments toward the amount that is owed. However, creditors will need to understand the limits that apply in these cases, and they will need to calculate the maximum amount that may be garnished from a person’s wages.

Wage Garnishment Under the CCPA

Federal laws detail the amounts that creditors may be able to receive from debtors through a wage garnishment order. These limits are specified in Title III of the Consumer Credit Protection Act (CCPA). This law states that deductions may be taken from a debtor’s disposable earnings, which is their income after all legally required deductions have been taken, including federal and state income taxes, Social Security taxes, and any retirement contributions that are required by law.

Wages can only be garnished if an employee earns at least 30 times the federal minimum wage. Currently, the minimum wage is $7.25 per hour, so only the amount more than 30 times this amount ($217.50) can be garnished each week. If a person makes between $217.50 and $290, the amount above $217.50 can be garnished. If a person makes more than $290, up to 25 percent of their wages may be garnished. 

The amount that can be garnished under these limits may be adjusted depending on whether a debtor is paid on a weekly, biweekly, semimonthly, or monthly basis. If a person has a variable income, the amount that may be garnished may vary depending on the amount they earn, but the limits described above will apply. The amount of wages that will be subject to garnishment may also be affected by other orders that are in place. For example, if a person earns $400 per week, but they have a child support order that automatically deducts $150 from their wages, the amount of their income that may be subject to garnishment by creditors will be reduced to $250, and the maximum amount that can be garnished is $32.50 ($250 - $217.50).

Contact Our Chicago Wage Garnishment Attorneys

Creditors may need to explore every option available to determine how they will be able to recover money from debtors. To ensure that all procedures will be followed correctly in these cases, it is crucial to work with a skilled and experienced attorney. At Walinski & Associates, P.C., we can help creditors pursue judgments against debtors when possible, and we can then make sure the correct wage garnishment orders are put in place. We can also help creditors address other related issues, such as bankruptcy filings by debtors. To learn about our debt collection services, contact our Cook County creditors’ rights lawyers at 312-704-0771 and set up a consultation with our firm.

Source:

https://www.dol.gov/agencies/whd/fact-sheets/30-cppa

Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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