A Quick Guide to the Different Types of Bankruptcy

Private bankruptcy gives debtors the opportunity to become debt-free within a little more than six years through the discharge of residual debt. Until then, however, it is a journey full of privation. First of all, the attachable assets of the person concerned, including real estate, building society contracts and cash assets, are used. The proceeds will then be paid out to the creditors and used to finance the legal costs.

With the actual bankruptcy proceedings, the good conduct phase, which can last up to six years, begins. During this time the debtor has to fulfill certain obligations, although portfolio recovery lawsuit is also a good option. Among other things, there is an obligation to work. The person concerned is obliged to pursue reasonable gainful employment. However, he is not allowed to keep the income he earns completely himself. A portion of the total – the so-called attachable income – it must to the bankruptcy administrator post, which in turn distributed to creditors. This is where the garnishment table comes into play.

Moreover, the debtor must have enough money left that he can continue to earn his living and meet his maintenance obligations. For this reason, there is a table with the seizure allowances based on the CCPA regulations. In the case of personal bankruptcy, this shows how high the attachment exemption limits are for debtors – that is, how much of their income they are allowed to keep.

Garnishment table for salaries or wages

Refer to the following link the garnishment table: https://www.dol.gov/agencies/whd/fact-sheets/30-cppa.

If people fail to meet their payment obligations, creditors can, under certain circumstances, obtain a court order for payment. If the debtor still does not pay, the oblige can then apply for an enforceable title which entitles him to carry out foreclosure measures.

One such measure is the salary or wage garnishment This starts directly with the debtor’s employer. He is obliged to determine the attachable part of the debtor’s labor income and to transfer it to the creditor. The garnishment table is also used in this context. The earned income is partly transferred to the creditors, while the debtor is allowed to keep the seizure allowance so that his subsistence level is secured.

If an account is threatened, you should set up a P account as soon as possible. In this way, you can quickly protect part of the credit against seizure. However, note the following in this context: The garnishment exemption limits differ between the garnishment table and the P account. In principle, 1,259.99 dollars are protected on the P account (valid from July 1st, 2021 to June 30th, 2023). The exemption can only be increased if you submit appropriate evidence, for example about maintenance payments that you have to pay.

Child support

If parents do not look after their child together, the parent with whom the child does not live is obliged to pay child support. Underage children as well as children of legal age are entitled – the latter, however, only if they are still in their initial education. The amount of maintenance is regulated in the table.

If one person fails to meet their maintenance obligations, the other party can sue for maintenance. If successful, she obtains a maintenance title with which an enforcement can take place. As a rule, there is then a garnishment of wages or salaries, as we have already described in the previous section. There is no special attachment table for maintenance attachment in this context. Rather, the same table is used here as for personal bankruptcy.

However, please note the following: The garnishment exemption limits according to the garnishment table do not necessarily have to be adhered to when it comes to legally required maintenance claims. In this case, more money can be requested than is provided in the table.

What is the amount of the seizure exemption limit based on?

The amount of the seizure exemption limit depends on your monthly net income and the number of people you are dependent on.

What is the garnishment allowance?

The garnishment table therefore plays an important role in the case of maintenance debts, garnishment of wages or salaries and personal bankruptcy. But how is the table read exactly and what should you watch out for in general?

Basically, the garnishment table shows you how much of your income can be garnished. This is therefore the attachable amount. If you want to calculate your seizure allowance – i.e., the amount that you are allowed to keep – you have to deduct the attachable amount from your income.

If you would like to consult the garnishment table for bankruptcy proceedings or in other cases, two factors are decisive: The garnishment exemption limits are based on both your monthly net income and the number of people to whom you are obliged to maintain.

Basically, if a person earns more than the garnishment exemption limit specified in the garnishment table, they may keep part of this amount. It should also be noted that the tax exemption increases if the person concerned has to pay maintenance to children or an (ex) partner. Thus, the garnishment table ensures that maintenance can continue to be paid.

Calculate income for the garnishment table: gross or net?

If you would like to use the garnishment table to determine your personal allowance in the event of a garnishment or bankruptcy, you need to know your monthly net income. Net means after deduction of all taxes, duties and compulsory social security contributions.

But what actually counts in income according to the garnishment table? Basically, this includes earned income, unemployment benefit 1, 4 benefits and the old-age pension. Sick pay must also be taken into account for the income according to the garnishment table. Accordingly, this is not protected against seizure. Taxes and social security contributions must be deducted from all these amounts.

However, there are also certain components of income that cannot be attached or can only be attached to a limited extent. These can be found in § 850a CCPA and § 850. According to the legal basis, for example, only half of the part of the labor income paid for the performance of overtime hours may be taken into account.

Among other things, according to the garnishment table, the Christmas bonus is only partly included in the income. Christmas bonuses may not be seized up to the amount of half of the monthly earned income, but not more than an amount of 500 dollars.


Leave a Reply