Legal Question in Credit and Debt Law in Iowa

It is true.

Federal law governs wage garnishment for debt.

Wages and accounts may be garnished.

Each creditor must apply to the court for a writ of execution and that writ is served on someone who owes you money-your employer, or in the case of a bank account garnishment, the bank where your money is deposited.

Certain income is exempt from garnishment-pension, social security, SSI, disability.

Also, if accounts are garnished, the garnishor is limited to money that has been in the account longer than ninety days, which presumably means it is wages. In practice banks do not observe these limitations-the normal practice is to take ALL the money and let you try and figure it out. Sometimes it works, sometimes it doesn�t.

Sometimes, under Iowa law we may see a debtor examination which is a legal proceeding whereby a debtor is sworn under oath to disclose the location of assets. It is rarely used and I have never seen it or heard of it being done in 11 years of practice.

Disposable earnings are earnings after taxes and social security, and unemployment insurance have been deducted. Health and Dental insurance, life insurance, charitable contributions and other payments are NOT exempt from garnishment.

Maximum amounts:

The maximum that may be garnished in any pay period (regardless of how many garnishment orders are received by the employer) is limited to the LESSER of two amounts-either 25 per cent of your disposable earnings OR the amount by which disposable earnings are greater than 30 times the Federal minimum wage, which is $5.85 per hour.

Let�s assume that your biweekly check is $1,300.

That would be $604 weekly (2,600/4.3)

604 x .25 = $151 maximum garnishment weekly

$5.85 x 30 = $175.50

We go with the lower figure for the week.

You may apply to the court for an exemption of more money from garnishment if the money is for the support of your family.

Maximum amount for any calendar year is on a sliding scale from $250 per creditor per year to 10 per cent of the annual wages per creditor, not per judgment under Iowa Code �642.21

Section �D� below suggests that if your annual income is $35,000 or more, you can expect that any one creditor may garnish $2,000 of your wages in any one year.

642.21 EXEMPTION FROM NET EARNINGS.

1. The disposable earnings of an individual are exempt from

garnishment to the extent provided by the federal Consumer Credit

Protection Act, Title III, 15 U.S.C. secs. 1671--1677 (1982). The

maximum amount of an employee's earnings which may be garnished

during any one calendar year is two hundred fifty dollars for each

judgment creditor, except as provided in chapter 252D and sections

598.22, 598.23, and 627.12, or when those earnings are reasonably

expected to be in excess of twelve thousand dollars for that calendar

year as determined from the answers taken by the sheriff or by the

court pursuant to section 642.5, subsection 4. When the employee's

earnings are reasonably expected to be more than twelve thousand

dollars the maximum amount of those earnings which may be garnished

during a calendar year for each creditor is as follows:

a. Employees with expected earnings of twelve thousand

dollars or more, but less than sixteen thousand dollars, not more

than four hundred dollars may be garnished.

b. Employees with expected earnings of sixteen thousand

dollars or more, but less than twenty-four thousand dollars, not more

than eight hundred dollars may be garnished.

c. Employees with expected earnings of twenty-four thousand

dollars or more, but less than thirty-five thousand dollars, not more

than one thousand five hundred dollars may be garnished.

d. Employees with expected earnings of thirty-five thousand

dollars or more, but less than fifty thousand dollars, not more than

two thousand dollars may be garnished.

e. Employees with expected earnings of fifty thousand dollars

or more, not more than ten percent of an employee's expected

earnings