California law has been an excellent ally to protecting consumer wages from the debt collection process. A creditor can request the chance for wage garnishment against a court order but the garnishment cannot exceed 25% of the total earnings that a debtor has. For many people working today, having access to this protection can be extremely beneficial. Garnishments from creditors can only cut into 25 to 50% of the disposable earnings of a debtor and they cannot exceed 40 times the minimum wage.
The calculation surrounding wage garnishment might sound quite difficult but it’s actually quite simple when you consider your own situation. The average laborer in Los Angeles will earn roughly $650 a week and this means that based on the garnishment rules in Los Angeles only $162.50 can be garnished from the weekly wages of an employee. This may sound like a lot for someone that’s earning just above minimum wage and this is where the second level of minimum wage protection comes into play. A creditor can only garnish a small amount of the $162.50. 40 times the $15 minimum wage comes out to $600 and a creditor will only be able to garnish half of the disposable income left over after this minimum wage. This leads to wage garnishment of just $25 a week that’s legal.
The idea of these wage garnishment limits is to make sure that people have enough money left over to pay their basic living expenses. It’s difficult for creditors to go above and beyond this rule and an employee whose wages are garnished too severely will never have the incentive to continue working. A significant percentage of wages are protected under wage garnishment buy it the extra money that a person earns can be subject to wage garnishment as soon as is deposited into a bank account. This was until the new debt collection laws came into place.
Debt Collection Law
The new debt collection California law that took place on September 1, 2020, suggests that money in the judgment of the debtor’s deposit account in the amount less than minimum wage or the basic standard of care for a family of four in the region is not subject to garnishment. The average monthly figure that is determined for this standard of living is set at $1788. Keeping sums below this threshold in your account will keep your account free from the chance that it may be garnished. Keeping sums in separate accounts will not mean that the larger amount is exempt so it’s very important to consider that the protection will focus on the total amount you are keeping in basic accounts not related to your retirement savings at each financial institution you deal with.
Levying a Bank Account Can Be Detrimental To Your Finances
Bank account levies can be very obvious for creditors to recoup their funds but if creditors continue to levy your bank account the money that you were counting on to continue paying bills, buy food, and more nearly disappears completely. The impacts on your bank account can be devastating and it’s often difficult for you to consider managing your rent and utilities with your accounts when they are getting consistently drained.
The new California law will work to protect families from wage garnishment and from issues that could affect their finances in a day-to-day format. It’s not a full solution for underlying debt issues but it can work to protect amounts of debt and debtors from letting creditors tap accounts whenever they want.
If you have questions about the protections that are available for you and your family, contact us today.