The Garnishment Laws in Washington Are Among the Most Oppressive in the Nation. Creditors

Bruce Neas

December 22, 2011

Page 1

MEMO

To: / Bruce Neas (Staff Attorney)
From: / Stan Corbit (Research Volunteer)
Date: / December 26, 2011
Re: / State Garnishment Statutes

The garnishment laws in Washington are among the most oppressive in the nation. Creditors are allowed to garnish a larger percentage of low income persons’ wages than in most other states. This can become a crippling burden for minimum wage workers who are trying to pay their rent and feed their families. Workers’ potential problems are also compounded by the fact that Washington has the 33rd highest cost of living in the country.

In Washington, wages protected from garnishment are the greater of 75% of disposable earnings or 30 times the federal minimum wage. This protection is equal to the minimum provided by federal law.[1] For example, assume that an individual has disposable earnings of just $271 per week, which is about 30 times Washington’s minimum wage, and that this individual has a past due medical bill that has resulted in a judgment against them. This person can lose $53.70 of their wages per week to garnishment.[2] The garnishment amount is less than 25% of their wages because at least $217.50 (30 times the federal minimum wage of $7.25) is shielded from garnishment. For a debtor with greater income, for example a debtor with $500 per week of disposable earnings, the garnishable amount is greater ($125 in this second hypothetical) and only the 25% limit comes into play.

Most states have garnishment laws, but the laws of the other states differ in certain key areas when it comes to debtor protections. The various state garnishment statutes fall into seven categories. Washington law, which falls in the seventh category discussed below, is more oppressive for debtors than the laws of states that fall in the other six categories.

First, some states have laws that give their courts the express discretion to limit garnishment, especially in cases of hardship.[3] As such, these states allow debtors to petition to exempt a greater portion of their incomes from garnishment. Such as the case of California which has a law that expressly allows the debtor to prove to the court that he or she has a need for an exemption greater than otherwise specified by statute.[4] Kansas “forbids wage garnishment for two months after recovery of the debtor or a family member from an illness.”[5] Another state, Rhode Island goes further and exempts wages from garnishment for one year from when the debtor last collected state assistance.[6] Furthermore, North Carolina completely exempts the wages of the head of the household to the extent needed for family support.[7]

Second, some states allow the debtor to exempt a higher percentage of wages from garnishment than would otherwise be protected by federal law. New York only allows creditors to garnish up to 10% of wages, leaving debtors at least 90% of their earnings in tact.[8] Delaware limits creditors to 15% of wages.[9] Similarly, Wisconsin limits creditors to 20% of wages.[10] Hawaii has a slightly different approach in which the only amount that is garnishable is “5% of the first $100 per month, 10% of the next $100 per month, and 20% of all sums in excess of $200 per month.”[11]

Third, some states use a higher multiple of the federal minimum wage when calculating the exemption. The states of Minnesota, New Mexico, North Dakota, South Dakota and Vermont all maintain that the debtor shall have exempt wages equal to 40 times the federal minimum wage.[12] New Hampshire provides 50 times the federal minimum wage.[13] Finally, some states also use their own states minimum wage as opposed to the federal minimum wage as a basis for this exemption provision. Connecticut protects 40 times the state minimum wage of $8.25 and Maine protects 40 times the state minimum wage of $7.50.[14]

Fourth, there are states that combine in their statutes both a higher percentage of ungarnishable wages and an exemption for more times the minimum wage. For example, besides maintaining a minimum for debtors of 45 times the state minimum wage of $8.25, Illinois also provides an exemption of 85% of the wages.[15] Likewise, Massachusetts provides for an exemption of 85% of the wages in addition to their statutory provision that permits debtors to keep 50 times the federal minimum wage.[16]

Fifth, some states, in consumer transactions, prohibit garnishment of wages. The statutes of both Pennsylvania and South Carolina bar wage garnishment (with narrow exceptions provided, such as for child support).[17] Another state, Texas, exempts from garnishment any property “provided for a family and has an aggregate fair market value of not more than $60,000”, as well as the property owned by a single adult “who is not a member of a family, and has an aggregate fair market value of not more than $30,000.”[18] In the case of Texas, these exemptions, though not as broad as in Pennsylvania and South Carolina, protect virtually all of wages for low income debtors.

Sixth, some states provide unique wage garnishment exemptions. Alaska’s wage garnishment law, for example, exempts $456 of weekly net earnings, increased to $716 if the debtor’s wages are the sole support of the household.[19] And if this number is compared to what is provided by statutes such as the one in the state of Washington, which exempt 30 times the federal minimum wage, it provides considerably more protection for low wage workers. The state of Iowa is also unique in its wage garnishment laws in that “the maximum amount of an employee’s earnings which may be garnished during any one calendar year is $250 for each judgment creditor.”[20]

The seventh and final category of states is those with wage garnishment limitations similar to Washington. Some of the states included in this category are Alabama, Georgia, Louisiana, Maryland and Kentucky.[21] However, since these states have statutes that are virtually duplicates of the Consumer Credit Protection Act, and since the exemptions outlined by the CCPA are the lowest baseline for debtors, these laws provide for the absolute bare minimum of debtor protections. Furthermore, excluding the state of Maryland, Washington has the highest cost of living among the rest of the states in this category.[22] Thus, if you combine what is needed to support self and family, and you compare that with the wages protected in other states, Washington’s wage garnishment law is among the most oppressive in the country for low wage workers.

Two simple changes to Washington’s law would bring Washington in line with other states and enable our lowest paid wage earners to retain earnings necessary for food and rent.[23] First, Washington could increase the protected wages from 30 times the federal minimum wage to 40 times the state minimum wage. Second, like California, Washington could have a clear provision that enables the courts to exercise discretion to raise the floor in the event of great need.[24] These changes would have minimal impact on the collection industry because, unlike a change that would reduce the 25% maximum as some states have done, an exemption equal to 40 times the state minimum wage would not reduce the amount of garnishable wages for anybody with take home pay of $483 or more per week.[25] Finally, the adoption of these two proposed changes would likely save money for Washington taxpayers because the changes would lead to fewer low income wage earners being forced to turn to the State’s safety net for benefits.[26]

[1] The federal law is set forth in the Consumer Credit Protection Act (“CCPA”). 15 U.S.C. 1671, et seq.

[2] However, when the garnishment is for child support, state and federal law allow for a greater percentage of wages to be garnished.

[3] It could be argued that Washington falls under this category because of RCW 6.27.150(4) provides: “Unless directed otherwise by the court, the garnishee shall determine and deduct exempt amounts under this section directed in the writ of garnishment and answer, and shall pay these amounts to the defendant.” (Emphasis added). However, this statutory language does not expressly specify a hardship exception, so the true intent of the clause can be open to interpretation.

[4]Cal. Civ. Proc. § 706.051 (West).

[5] Kan. Stat. Ann. § 60-2310.

[6] R.I. Gen. Laws § 9-26-4.

[7] N.C. Gen. Stat. § 1-362.

[8]N.Y. CVP.Law § 5205.

[9] Del. Code Ann. tit. 10 § 9584.

[10]Wis. Stat. Ann. § 812.34.

[11]Haw. Rev. Stat. § 652-1.

[12]Minn. Stat. §§ 571.922, 550.136; N.M. Stat. Ann. Ann. § 35-12-7; N.D. Cent. Code § 32-09.1-03; S.D. Codified Laws § 21-18-51; Vt. Stat. Ann. Tit. 12, § 3170.

[13]N.H. Rev. Stat. § 512:21(II).

[14]Conn. Gen. Stat. §§ 31-58, 52-361a.; Me. Rev. Stat. tit.9-A, § 5-105; Me. Rev. Stat. tit.26 § 664.

[15]735 Ill. Comp. Stat. § 5/12-803; 820 Ill. Comp. Stat. § 105/4(a).

[16]Mass. Gen Laws.Ch. 246 § 28.

[17]42 Pa. Stat. Ann. § 8127; S.C. Code Ann. § 15-39-410.

[18] Tex. Prop. Code Ann. § 42.001.

[19]Alaska Stat. §§ 09.38.030, 09.38.050, 09.38.115; Alaska Ad-min. Code tit.8, § 95.030.

[20] Iowa Code § 642.21

[21]Ala. Code § 5-19-15; Ga. Code Ann. § 18-4-20.; La. Civ. Code Ann. art. 13 § 3881; Md. Code Ann., Com. Law § 15-601.1; Ky. Rev. Stat. Ann. § 427.010;

[22]

[23] The living wage for a single individual living in Washington is $16,530, the living wage for one adult and one child living in Washington is $32,172, the living wage for a single individual living in King County is $19,294, and the living wage for one adult and one child living in King County is $36,361. See, However, under Washington’s current wage garnishment law, which provides a weekly exemption equal to 30 times the federal minimum wage of $7.25 per hour, the exempt wages earned over a year, when assuming the worker works all 52 weeks, is only $11,310. If the weekly exemption in Washington were equal to 40 times the state minimum wage of $9.04 per week, the wages protected over a year would be $18,803.20 and about equal to a minimum living wage in Washington for an individual, but still much less than the living wage for a family.

[24] This change would not have a significant adverse impact on the collection industry because it is likely that most debtors would not use the provision. In a random survey conducted by the Northwest Justice Project of 213 King County District Court collection cases, over 70% of the judgments were obtained by default.

[25] 75% of $483 is $362.25. 40 times the state minimum wage of $9.04 is $361.60. The yearly salary for an individual making $483 per week is $25,116.

[26]Payday Loan Alternatives: Are They Legal? Washington State Bar News. Oct., 2011, at 19.