Eighth Circuit Rules That the CCPA Protects Private Insurance Disability Payments

In a recent case, the Eight Circuit Court of Appeals ruled that private disability payments are included in the definition of “earnings” under the federal Consumer Credit Protection Act (CCPA). United States v. Ashcraft, 2013 WL 5539599 (8th Cir. Oct. 9, 2013). This means that such earnings are subject to the CCPA’s limits on garnishment. The CCPA protects 25% of your disposable earnings from collection (what's left after mandatory deductions) or the amount by which your wages exceed 30 times the minimum wage, whichever is lower. States must protect, at a minimum, this amount too (although some choose to protect even more).

Although this case dealt with collection efforts by the federal government (and therefore state law did not come into play), it can be argued that since federal law sets forth the minimum protections, states must include private disability insurance within the definition of “earnings” as well. Keep in mind that many states already expressly protect private disability insurance payments in full. (You can learn more about this case in Nolo’s article Can a judgment creditor garnish private disability payments?)