Colorado § 13-54-104 - Restrictions on garnishment and levy under execution or attachment - definitions.

§ 13-54-104. Restrictions on garnishment and levy under execution or attachment - definitions.

(1) As used in this section, unless the context otherwise requires:

(a) "Disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld and after the deduction of the cost of any health insurance provided by the individual pursuant to section 14-14-112 and the cost of any health insurance for the individual or members of the individual's household that is provided by the individual's employer and withheld from the individual's earnings. In the case of an order for the support of a spouse, former spouse, or dependent child, "disposable earnings" includes money voluntarily deposited in tax-deferred compensation funds.

(b) (I) "Earnings" means:

(A) Compensation paid or payable to an individual employee or independent contractor for personal labor or services;

(B) Funds held in or payable from any health, accident, or disability insurance.

(II) For the purposes of writs of garnishment that are the result of a judgment taken for arrearages for child support or for child support debt, for restitution for the theft, embezzlement, misappropriation, or wrongful conversion of public property, or in the event of a judgment for a willful and intentional violation of fiduciary duties to a public pension plan where the offender or a related party received direct financial gain, "earnings" also means:

(A) Workers' compensation benefits;

(B) Any pension or retirement benefits or payments, including but not limited to those paid pursuant to articles 51, 54, 54.5, and 54.6 of title 24, C.R.S., and articles 30.5 and 31 of title 31, C.R.S.;

(C) Dividends, severance pay, royalties, monetary gifts, monetary prizes, excluding lottery winnings not required by the rules of the Colorado lottery commission to be paid only at the lottery office, taxable distributions from general partnerships, limited partnerships, closely held corporations, or limited liability companies, interest, trust income, annuities, capital gains, or rents;

(D) Any funds held in or payable from any health, accident, disability, or casualty insurance to the extent that such insurance replaces wages or provides income in lieu of wages; and

(E) Tips declared by the individual for purposes of reporting to the federal internal revenue service or tips imputed to bring the employee's gross earnings to the minimum wage for the number of hours worked, whichever is greater.

(III) For the purposes of writs of garnishment issued by the state agency responsible for administering the state medical assistance program, which writs are issued as a result of a judgment for medical support for child support or for medical support debt, "earnings" includes:

(A) Payments received from a third party to cover the health-care cost of the child but which payments have not been applied to cover the child's health-care costs;

(A.5) Unemployment insurance benefits; and

(B) State tax refunds.

(IV) For the purposes of writs of garnishment issued by a county department of human or social services responsible for administering the state public assistance programs, which writs are issued as a result of a judgment for a debt for fraudulently obtained public assistance, fraudulently obtained overpayments of public assistance, or excess public assistance paid for which the recipient was ineligible, "earnings" includes workers' compensation benefits.

(V) For the purposes of attachments of earnings or writs of garnishment that are the result of a judgment taken for court assessments including fines, fees, costs, restitution, and surcharges pursuant to section 16-11-101.6 or section 16-18.5-105, C.R.S., "earnings" also means those enumerated under subparagraph (I) of this paragraph (b).

(1.1) Repealed.

(2) (a) Except as provided in subsection (3) of this section, the maximum part of the aggregate disposable earnings of an individual for any workweek that is subjected to garnishment or levy under execution or attachment may not exceed:

(I) For debts other than debts pursuant to subsection (2)(a)(II) of this section, the lesser of:

(A) Twenty percent of the individual's disposable earnings for that week; or

(B) The amount by which the individual's disposable earnings for that week exceed forty times the federal minimum hourly wage prescribed by 29 U.S.C. sec. 206 (a)(1) in effect at the time the earnings are payable; or

(C) The amount by which the individual's disposable earnings for that week exceed forty times the state minimum hourly wage pursuant to section 15 of article XVIII of the state constitution in effect at the time the earnings are payable;

(D) Notwithstanding the provisions of subsections (2)(a)(I)(A), (2)(a)(I)(B), and (2)(a)(I)(C) of this section, a judgment debtor may file a written objection pursuant to section 13-54.5-108 (1)(a), without the necessity of conferring with the garnishee, and seek a hearing pursuant to section 13-54.5-109 (1)(a). At the hearing the judgment debtor may establish that a greater portion of the judgment debtor's disposable earnings should be exempt from garnishment for the support of the judgment debtor or the judgment debtor's family supported, in whole or in part, by the judgment debtor. At such hearing, the court shall, pursuant to section 13-54.5-109 (2), determine whether the earnings of the judgment debtor following garnishment, together with any other income received by the judgment debtor's family, are insufficient to pay the actual and necessary living expenses of the judgment debtor or the judgment debtor and judgment debtor's family based upon proof of such expenses incurred during the sixty days prior to the hearing. In making this determination, the living expenses the court must consider include, but are not limited to, the following: Rent or mortgage; utilities; food and household supplies; medical and dental expenses; child care; clothing; education; transportation; and maintenance, alimony, or child support. If the court makes a determination of insufficiency, it shall order that more of the judgment debtor's disposable earnings should be exempt from garnishment than prescribed by subsections (2)(a)(I)(A), (2)(a)(I)(B), and (2)(a)(I)(C) of this section.

(II) For debts for fraudulently obtained public assistance or fraudulently obtained overpayments collected pursuant to section 26-2-128 (1)(a), C.R.S., the lesser of:

(A) Thirty-five percent of the individual's disposable earnings for that week; or

(B) The amount by which the individual's disposable earnings for that week exceed thirty times the federal minimum hourly wage prescribed by section 206 (a)(1) of title 29 of the United States Code in effect at the time the earnings are payable; or

(C) The amount by which the individual's disposable earnings for that week exceed thirty times the state minimum hourly wage pursuant to section 15 of article XVIII of the state constitution in effect at the time the earnings are payable.

(b) In the case of earnings for any pay period other than a week, a multiple of the federal minimum hourly wage or the state minimum hourly wage, equivalent in effect to that set forth in paragraph (a) of this subsection (2) shall be used.

(3) (a) The restrictions of subsection (2) of this section do not apply in the case of:

(I) Any order for the support of any person issued by a court of competent jurisdiction or in accordance with an administrative procedure which is established by state law, which affords substantial due process, and which is subject to judicial review;

(II) Any order of any court of the United States having jurisdiction over cases under chapter 13 of title 11 of the United States Code, the federal bankruptcy code of 1978;

(III) Any debt due for any state or federal tax.

(b) (I) The maximum part of the aggregate disposable earnings of an individual for any workweek which is subject to garnishment or levy under execution or attachment to enforce any order for the support of any person shall not exceed:

(A) Where such individual is supporting his spouse or dependent child, other than a spouse or child with respect to whose support such order is used, fifty percent of such individual's disposable earnings for that week; and

(B) Where such individual is not supporting a spouse or dependent child as described in sub-subparagraph (A) of this subparagraph (I), sixty percent of such individual's disposable earnings for that week.

(II) With respect to the disposable earnings of any individual for any workweek, the fifty percent specified in sub-subparagraph (A) of subparagraph (I) of this paragraph (b) shall be deemed to be fifty-five percent, and the sixty percent specified in sub-subparagraph (B) of subparagraph (I) of this paragraph (b) shall be deemed to be sixty-five percent if and to the extent that such earnings are subject to garnishment or wage assignment or income assignment or levy under execution or attachment to enforce a support order with respect to a period that is prior to the twelve-week period that ends with the beginning of such workweek.

(III) Notwithstanding the maximum part of the aggregate disposable earnings of an individual which is subject to garnishment as provided in this paragraph (b), a debtor who is totally and permanently disabled and who establishes that at least seventy-five percent of his income is derived from any disability income or benefits may object to the amount of the aggregate disposable earnings subject to garnishment under this paragraph (b). The court, upon consideration of the circumstances of the parties, may provide for garnishment in an amount less than such maximum amounts.

(4) The restrictions established by this section shall be adhered to whether or not the employer of the debtor is subject to garnishee process.

Source: L. 59: p. 532, § 4. CRS 53: § 77-13-4. C.R.S. 1963: § 77-2-4. L. 71: p. 853, § 2. L. 79: Entire section R&RE, p. 623, § 1, effective May 31. L. 80: (1)(b) amended, p. 613, § 2, effective April 10; (3)(a)(II) amended, p. 785, § 11, effective June 5. L. 85: (3)(b)(II) amended, p. 590, § 5, effective July 1. L. 87: (1)(b) amended, p. 595, § 22, effective July 10. L. 88: (1.1) added, p. 609, § 1, effective April 14; (3)(b)(III) added, p. 611, § 3, effective July 1. L. 90: (1)(b) amended, p. 564, § 32, effective July 1. L. 91: (1)(b) amended and (1.1) repealed, pp. 383, 384, §§ 3, 4, effective May 1. L. 92: (1)(b) amended, p. 577, § 3, effective July 1; (1)(a) amended, p. 172, § 5, effective August 1. L. 93: (1)(b)(II) amended, p. 1871, § 3, effective June 6. L. 94: (1)(a) and (1)(b)(I)(A) amended, p. 1535, § 2, effective May 31; (1)(b)(II) amended, p. 2048, § 7, effective June 3; (1)(b) amended, p. 1594, § 3, effective July 1; (1)(b)(II) amended, p. 1252, § 4, effective July 1; (2)(a) amended, p. 2061, § 2, effective July 1. L. 96: (1)(b) and (3)(b)(II) amended, p. 590, § 1, effective July 1. L. 98: (1)(b)(II)(B) amended, p. 920 § 5, effective July 1. L. 99: (1)(b)(II)(B) amended, p. 620, § 13, effective August 4. L. 2005: IP(1)(b)(II) and (1)(b)(II)(B) amended, p. 71, § 1, effective August 8. L. 2006: (1)(b)(IV) added, p. 948, § 4, effective August 7. L. 2007: (2) amended, p. 877, § 5, effective July 1. L. 2009: (1)(b)(II)(B) amended, (SB 09-066), ch. 73, p. 259, § 23, effective July 1; (1)(b)(II)(B) amended, (SB 09-282), ch. 288, p. 1396, § 57, effective January 1, 2010. L. 2012: (1)(b)(V) added, (HB 12-1310), ch. 268, p. 1392, § 2, effective June 7. L. 2015: (1)(b)(I)(A) and (1)(b)(II)(C) amended, (SB 15-283), ch. 301, p. 1239, § 3, effective July 1. L. 2018: (1)(b)(IV) amended, (SB 18-092), ch. 38, p. 399, § 9, effective August 8. L. 2019: (1)(a), IP(2)(a), and (2)(a)(I) amended, (HB 19-1189), ch. 214, p. 2224, § 3, effective August 2.

Editor's note: (1) Amendments to subsection (1)(b) by Senate Bill 94-164, Senate Bill 94-088, Senate Bill 94-141, and House Bill 94-1345 were harmonized.

(2) Amendments to subsection (1)(b)(II)(B) by Senate Bill 09-066 and Senate Bill 09-282 were harmonized, effective January 1, 2010.

Cross references: For the legislative intent contained in the 2006 act enacting subsection (1)(b)(IV), see section 8(2) of chapter 208, Session Laws of Colorado 2006. For the legislative declaration contained in the 2007 act amending subsection (2), see section 1 of chapter 226, Session Laws of Colorado 2007. For the legislative declaration in SB 18-092, see section 1 of chapter 38, Session Laws of Colorado 2018.

ANNOTATION

Law reviews. For article, "The Revolution in Consumer Credit Legislation", see 45 Den. L.J. 679 (1968). For article, "An Individual's Retirement Benefits Under the Bankruptcy Code", see 16 Colo. Law. 1211 (1987). For article, "Perils of Pre-Bankruptcy Planning: Transfers, Exemptions and Taxes", see 17 Colo. Law. 1513 (1988). For article, "Operating a Personal Service Corporation", see 17 Colo. Law. 2011 (1988). For article, "Setoff and Security Interests In Deposit Accounts", see 17 Colo. Law. 2108 (1988). For article, "Exempting Retirement Benefits from Bankruptcy in Colorado", see 18 Colo. Law. 17 (1989). For article, "Rights of the Debtor and Creditor to Retirement Plan Benefits", see 20 Colo. Law. 199 (1991). For article, "Overcoming Difficulties in Collecting Child Support and Maintenance", see 24 Colo. Law. 2725 (1995).

Annotator's note. Since § 13-54-104 is similar to repealed laws antecedent to CSA, C. 93, § 16, cases construing those provisions have been included in the annotations to this section.

Earnings received do not lose their character as "wages" and become capital. It has been argued with much ingenuity that the earnings of the laborer, when received by him, are no longer wages, but capital; that the exemption statute has performed its office when it has enabled the laborer to secure his wages from his employer without let or hindrance; and that thereafter the statute cannot be invoked in his favor. This section cannot be thus reasoned away. Such a construction is narrow and illiberal. It would compel the laborer to leave his earnings in the hands of his employer, or else forego the protection of the statute altogether. It would not only deprive him of the privilege of depositing his earnings with any bank or other depositary for safekeeping, but would subject his wages to supplemental proceedings even in his own pocket; for, if earnings once received immediately lose their character as wages, then it is evident that the laborer could never retain his earnings for a single hour without exposing them to the very perils which the statute was designed to avert. Such a construction would practically frustrate the beneficent objects of the statute. Rutter v. Shumway, 16 Colo. 95, 26 P. 321 (1891).

Earnings include money received according to the work done. The earnings of defendant were according to the work done, and not according to the length of employment. This fact does not preclude them from being "earnings" within the meaning of the statute. Stranger v. Harris, 77 Colo. 340, 236 P. 1001 (1925).

The fact that some capital, and some assistants, enter into the work, does not prevent the income from the contract from being "earnings" within the meaning of our statute. Stranger v. Harris, 77 Colo. 340, 236 P. 1001 (1925).

Employee's interest in erstwhile retirement plan is not earnings. Where employee terminated his employment and never did qualify for any pension or retirement benefits, employee's interest in erstwhile employer's retirement plan cannot be considered "earnings". Fin. Acceptance Co. v. Breaux, 160 Colo. 510, 419 P.2d 955 (1966).

Shares of common stock debtor purchased through an employee stock purchase plan are not exempt earnings pursuant to this section and § 5-5-105. In re Kramer, 339 B.R. 761 (Bankr. D. Colo. 2006).

Termination payments held earnings for exempt services. Termination payments which may be paid to the debtor pursuant to an insurance agent's agreement after the filing of his Chapter 7 petition are not payments due him under a covenant not to compete but are earnings for services which are exempt under this section. In re Marshburn, 5 B.R. 711 (Bankr. D. Colo. 1980).

The whole spirit of acts such as this section is such that it was intended to protect the exempt property from all manner of coercive process of the law, and not merely to protect the earnings of the debtor and other exempt property from seizure by means of the processes technically known as attachment, execution, or garnishment, but to preserve them for the benefit of his family against any appropriation for the payment of his debts not authorized by law to which he does not consent. Fin. Acceptance Co. v. Breaux, 160 Colo. 510, 419 P.2d 955 (1966).

Attorney's fees not deductible before computing percentage of disposable earnings available for garnishment. Rios v. Mireles, 937 P.2d 840 (Colo. App. 1996).

A defendant cannot counterclaim for wages that are exempt. In an action for wages exempt by statute from levy under execution, attachment, or garnishment which are due from a defendant, the defendant cannot counterclaim a debt due from the plaintiff to him. Fin. Acceptance Co. v. Breaux, 160 Colo. 510, 419 P.2d 955 (1966).

Subsection (1.1) held invalid. Since the federal constitution reserves to Congress the right to legislate bankruptcy exemptions, this attempt by the state to create a separate bankruptcy exemption was impermissible. The exemption provided by this subsection was one which served to protect a judgment debtor in bankruptcy but did not protect him from execution and levy. In re Mata, 115 B.R. 288 (Bankr. D. Colo. 1990) (decided prior to 1991 repeal of subsection (1.1)).

Since this subsection makes specific reference to ERISA plans, it is clear that this provision must be considered to have been preempted by the explicit provisions of ERISA. In re Starkey, 116 B.R. 259 (Bankr. D. Colo. 1990) (decided prior to 1991 repeal of subsection (1.1)).

Subsection (2), which limits an exemption in pension plan benefits to 75% of the "avails" of any such plan, is preempted by the ERISA provision which mandates a 100% exemption. In re Starkey, 116 B.R. 259 (Bankr. D. Colo. 1990).

Deferred compensation plans are "earnings" within the meaning of this section and not a "trust". In re Vann, 113 B.R. 704 (Bankr. D. Colo. 1990) (decided prior to 1991 amendment to subsection (1)(b)).

Future commissions based on renewal of insurance policies qualify as "earnings" under subsection (1)(b) because they are "compensation . . . payable for personal services". Therefore, all renewal commissions are "earnings" that would be entitled to the statutory exemption. In re Fuchs, 189 B.R. 811 (Bankr. D. Colo. 1995).

Indebtedness owed to an independent contractor is not earnings, except for the garnishments described in section (1)(b)(II). Idaho Pac. Lumber Co. v. Celestial Land Co., 2013 COA 136, 348 P.3d 950.

Personal injury settlement proceeds do not constitute "earnings" as the term is defined in this section. Therefore, the statutory exemptions and methods of computing "disposable earnings" subject to garnishment of earnings do not apply. People ex rel. J.W., 174 P.3d 315 (Colo. App. 2007).

Applicability of exemption. The exemption provided for in this section only applies to that portion of a pension or profit sharing plan that is interest or income and not to the corpus of such plan. In re Toner, 105 B.R. 978 (Bankr. D. Colo. 1989); In re Alagna, 107 B.R. 301 (Bankr. D. Colo. 1989).

The exemption in this section does not apply in an action for dissolution of marriage commenced by petition before May 1, 1991. In re LeBlanc, 944 P.2d 686 (Colo. App. 1997).

Preemption of section. This section is preempted with respect to ERISA qualified pensions or plans. In re Alagna, 107 B.R. 301 (Bankr. D. Colo. 1989).

Debtors are permitted under the Bankruptcy Code and this section to exempt 75% of the entire balance of their IRA's from the bankruptcy estate. In re Kulp, 949 F.2d 1106 (10th Cir. 1991).

Wages paid to subcontractor do not lose characterization of "earnings" by virtue of having been deposited in joint marital account. In re Kobernusz, 160 B.R. 844 (Bankr. D. Colo. 1993).

Attorney's lien is not "required to be withheld" until it is enforced and should not be calculated as part of garnishable "disposable earnings" until that time. Rios v. Mireles, 937 P.2d 840 (Colo. App. 1996).

Trial court's determination that defendant was not supporting other dependents was supported by record. Rios v. Mireles, 937 P.2d 840 (Colo. App. 1996).

Defendant not entitled to more interest than has accrued on the amount due. Rios v. Mireles, 937 P.2d 840 (Colo. App. 1996).

Statutory limit on percent of wage that can be garnished is subject to fraud exception. Where debtor and garnishee colluded to avoid paying employee's wages until garnishment period had ended, court properly held garnishee liable for 100% of wages. Hoyman v. Coffin, 976 P.2d 311 (Colo. App. 1998).

Applied in In re McCue, 645 P.2d 854 (Colo. App. 1982); Bernstein v. Richardson, 34 B.R. 611 (Bankr. D. Colo. 1983).