Opinion ID: 4511632
Heading Depth: 2
Heading Rank: 3

Heading: Consumer Credit Protection Act

Text: The Berrys’ final argument relies on the garnishment cap in § 303 of the Consumer Credit Protection Act (“CCPA”), which limits restitution under 18 U.S.C. § 3613(a)(3). The CCPA sets maximum garnishment at 25% of “earnings for that week,” 15 U.S.C. § 1673, and the statutory definition of “earnings” includes “periodic payments pursuant to a pension or retirement program,” 15 U.S.C. § 1672(a). The Berrys contend that, if the government were to liquidate Michael’s IRA funds, then the lump sum resulting from that liquidation would be “earnings.” They posit that “[e]arnings are defined as payment through personal services or retirement benefits,” and they note that the definition of “earnings” in § 1672 does not explicitly exclude lump-sum payouts of retirement benefits. The Berrys aver further that excluding Michael’s IRAs, which have no periodic payment requirement (other than to preserve tax benefits) would be absurd because that would make “[t]he language of the 8 Case: 19-20050 Document: 00515326543 Page: 9 Date Filed: 02/28/2020 No. 19-20050 policy . . . the difference between losing all his savings or being able to continue to pay bills during retirement.” That result would, they think, frustrate the CCPA’s purpose of “allow[ing] retirees to continue to participate in the economy.” Nevertheless, the CCPA does not apply here. To be “earnings” under the CCPA, retirement fund payments, as much as anything, must be “compensation paid or payable for personal services.” 15 U.S.C. § 1672. Even if Michael’s or his employer’s payments into the ERISA plan might have been “earnings” when the payments were made, he is no longer covered by that plan. Upon retirement, Michael rolled over the ERISA plan in a lump sum to the company-run IRA plan. Michael is not required to receive periodic payments from the IRA as from an ERISA-governed pension plan, and after his cash-out and deposit into a new retirement account, a lump-sum payment from the new account is not compensation paid for personal services, United States v. Sayyed, 862 F.3d 615, 619 (7th Cir. 2017) (“A lump-sum distribution of retirement funds is clearly not compensation paid for personal services or periodic payments pursuant to a retirement program.”); see also DeCay, 620 F.3d at 543 (deeming “payments made from an employer’s retirement program to an employee” “‘earnings’ under the CCPA” (emphasis added)); Usery v. First Nat’l Bank of Ariz., 586 F.2d 107, 110–111 (9th Cir. 1978) (wages are no longer “earnings” once deposited into an employee’s bank account). Because the funds to be garnished are not compensation paid for personal services, they are not “earnings,” and the CCPA’s limit on garnishment does not apply.