This may be helpful for individuals working on child support cases, or answering/challenging a demand for payment or garnishment pursuant to a valid judgment. In both situations, when considering Federal income such as SSI, military pay, retirement, federal pensions, contract payments or other income with its ultimate genesis in the Federal Government, the following chart will be helpful: Federal Garnishment Grid. This originates from the Commissioner at Commissioner’s discussion of permissible garnishment actions against Federal income. Ultimately, the most common code section dealing with Federal income and all forms of garnishment is 5 CFR §581.104.
An area of often overlooked income “jamming” is contract income for government work. Unless the individual is paid directly for the work services provided, contract payment to a business or other entity is not subject to garnishment. This is a powerful tool for small businesses working with the government. If you own such a business, be sure to speak with an attorney to verify your company is properly setup and wholly independent of you as an individual. See 5 CFR §581.104(g) — personal services are NOT exempt, but general contract payments are.
Also, note that while some forms of disability payments are attachable, generally, income that is not derived from work or prior work for the government, is not attachable. Therefore SSI income, or disability income not related to service related action is not attachable. See 5 CFR §581.104(b) and 5 CFR §581.104(j).
Remember, that even where income is concerned, garnishments cannot exceed:
25% of disposable weekly income, or
- the amount the debtor’s disposable income exceeds 30 times Federal Minimum Wage, whichever is less
(see 15 USC §1673(a))
NOTE: This does not apply to child support or alimony, where withholding can be any amount ordered by a Court, but generally not exceed 50% for individuals with other obligations, or up to 65% for single, non-obliged child support/alimony payors. This is all explained at 15 USC §1673(b). This can get right complex, so be sure to contact us if there is a question of multiple deductions, obligations, and other considerations. We have considerable experience in handling complicated support issues. Thee exemptions discussed in this article also apply to child support and alimony.
When jamming collections, it is important to (a) delay the action as long as possible (except in support or alimony issues), and (b) seek to categorize the income under a permissible exemption. This takes specialized skill, and frankly, it is not always possible. Careful planning is required to ensure the maximum number of exemptions are considered. Do you have a question about income exemption and garnishments?