State and Federal Laws include important provisions that may shield you from usurious and exploitative debt collection practices. As you may have already read, one of the surest ways to secure protection from a creditor is through bankruptcy proceedings. However, there are many other laws at the state and federal level to protect troubled borrowers when seeking debt relief.
The Consumer Credit Protection Act
Under Title III of CCPA, an employer is expressly prohibited from firing an employee for wage garnishment. Employers may view unresolved, unpaid debt as a sign of employee dissipation or irresponsibility. However, an employer cannot take action on the troubled debtor, like termination, unless creditors successfully sue him or her a second or third time.
Title III also provides that creditors may only, in most cases, garnish 25% or less of one’s disposable income. Disposable income is limited to that income available after all applicable state and federal taxes have been excised.
In some cases federal law will take precedent over state law, so the state court is legally obliged to adjust the wage garnishment percentage in a judgment to meet these requirements.
If it is found that a debtor cannot pay for basic necessities and utilities, like food and electricity, the court may deem it necessary to adjust or reduce the monthly wage garnishment payment to creditors.
Title III designed to protect borrowers
Most importantly, Title III favors the borrower. Federal law provides that a troubled borrower and worker should always receive some degree of compensation for their labors.