Like any American family living paycheck to paycheck, Conrad Goetzinger and Cassandra Rose hope that if they make the right choices, their $13-an-hour jobs will keep the lights on, put food in the fridge and gas in the car.

But every two weeks, the Omaha couple are reminded of a choice they didn't make and can't change: A chunk of both of their paychecks disappears before they see it, seized to pay off old debts.

The seizures are the latest tactic of debt collectors who have tracked the couple for years, twice scooping every penny out of Goetzinger's bank account and even attempting to seize his personal property.

For Goetzinger, 29, they're the bewildering consequences of a laptop loan he didn't pay off after high school; for Rose, 33, a painful reminder of more than $20,000 in medical bills racked up while uninsured. The garnishments, totaling about $760 each month, make up the single largest expense in the budget.

"I honestly dread paydays," Goetzinger said. "Because I know it's gone by Saturday afternoon, by the

time we go grocery shopping."

Across the country, millions of other workers face a similar struggle: how to live when a large fraction of their paycheck is diverted for a consumer debt. The highest rates of garnishment are among workers who, like Rose and Goetzinger, earn between $25,000 and $40,000, but the numbers are nearly as high for those who earn even less, according to a new study by ADP, the nation's largest payroll services provider.

Those who fall into this system find their futures determined by laws that consumer advocates say are outdated, overly punitive and out of touch with the financial reality faced by many Americans.

"Most low-income people are struggling to keep up with basic fixed costs," said Michael Collins, faculty director of the Center for Financial Security at the University of Wisconsin-Madison.

ADP's study, requested by ProPublica, looked at how many employees had their wages garnished and why. In the Midwest, one in 16 workers earning between $25,000 and $40,000 had wages seized for a consumer debt in 2013. Advocates say lawmakers should offer more protection to this hidden population.

The federal law regulating garnishment dates to 1968, when the financial life of Americans was much simpler. Time has eroded what even then were modest protections.

The law barred creditors from taking any wages from the very poorest of workers, but used a calculation based on the minimum wage to identify them. Since the federal minimum wage hasn't kept pace with inflation, today only workers earning about $11,000 annually or less — a wage below the poverty line — are protected.

The law also allows collectors to garnish a quarter of a debtor's after-tax pay, an amount that government surveys show is unaffordable for many families.

And the law is silent on perhaps the most punishing tactic of collectors: Although a collector can't take more than 25 percent of a debtor's paycheck, if that paycheck is deposited in a bank all of the money in the account can be taken to pay down the debt.

State laws, while often more comprehensive than the federal rules, vary widely. Only a handful, for instance, automatically protect a minimum amount of funds in a debtor's account.

When garnishment protections do exist, the burden is usually on debtors to figure out if and how the laws protect their assets.

"In an awful lot of states, the information that the employee gets is going to be very, very confusing," said William Henning, a law professor at the University of Alabama and chairman of a committee drafting a model state law on wage garnishment.

Shortly before Thanksgiving in 2008, as the country was in the throes of the Great Recession, Goetzinger faced a financial crisis of his own: Every penny in his bank account, $688.43, went missing. In a panic, he called his bank and discovered that a company he'd never heard of had garnished the account. There was nothing he could do.

The company, Midland Funding LLC, struck again five months later: taking all of the $179.14 in the account.

This time the damage extended beyond the lost cash, Goetzinger said. Not knowing the account was now at zero, he overdrew it. That triggered an overdraft fee and then another. Soon, the fees had him in a several-hundred-dollar hole. He closed his account.

In 1968, when lawmakers passed the landmark Consumer Credit Protection Act, it specifically limited how much of a debtor's pay could be seized. But it made no mention of bank account garnishments.

Carolyn Carter, director of advocacy at the National Consumer Law Center, said the lawmakers didn't address bank seizures because they weren't common at the time. As a result, she said, "the wages that are deposited in a bank account become suddenly much more vulnerable than anyone realized."

Lawmakers also couldn't have anticipated that buying old debt would become its own industry.

Goetzinger's bank account, for instance, was garnished by Midland Funding. Midland is a subsidiary of the publicly traded Encore Capital Group, one of the country's largest debt buyers.

Goetzinger, uninsured and epileptic, assumed the raids stemmed from unpaid medical bills. But he learned in August that wasn't the case when a reporter shared a copy of his court file with him.

About 10 years ago, shortly after graduating from high school, Goetzinger said, he bought a laptop. At some point, he fell behind on the payments, though he doesn't remember the circumstances. In 2008, court records show, Midland filed suit, saying it bought the debt from Dell's lending arm and Goetzinger owed $2,400, including interest and fees.

The court file shows that a summons for the lawsuit was left at Goetzinger's current address in 2008. However, Goetzinger said the house, which is owned by his stepfather's parents, was undergoing renovations and uninhabited at the time. Nebraska law doesn't require defendants to be served personally.

Encore Capital spokeswoman Lisa Margolin-Feher said the company files suit against consumers only when other attempts to collect are unsuccessful. "Our preference, by far, is to work directly with a consumer to tailor a repayment plan."

Altogether, Midland has tried three methods of collecting against Goetzinger. After multiple further attempts on his bank account proved unsuccessful, the court record shows, the company twice tried seizing personal property in 2010 and 2012, but a sheriff deputy determined each time he owned nothing eligible for seizure.

Finally, early this year, almost six years after the lawsuit was filed, Midland served Goetzinger's employer with a garnishment order.

For most workers, the unexpected loss of a quarter of their wages would make life difficult. For low-income workers who live from paycheck to paycheck, it can be devastating.

A recent survey by the Federal Reserve asked thousands of consumers whether they could afford an emergency expense of $400. Less than half of respondents said they could without borrowing money or selling something. Nearly 20 percent said they could think of no way they might cover such a cost.

The National Consumer Law Center, in a model reform law, argues that the cap on garnishment needs to be lowered to 10 percent of income to preserve a living wage for debtors.

For Goetzinger, the loss ranges from $200 to $250 each paycheck, depending on whether he can get overtime work at his customer service job. Goetzinger has paid about $2,000 and still owes about $700.

To make do, he and Rose, who have been together for eight years, say they cut corners where they can and put off things. Recently, they learned that Rose's girls, ages 11 and 12, have cavities, but say it's a matter of choosing between dental work and keeping the power on.

Rose also works full time as a payroll clerk, but her check also is being garnished for past medical bills. "I suffer from horrible migraines," said Rose, who until recently was uninsured. A 2013 visit to an emergency room and MRI revealed no tumor but left a bill that exceeded $18,000. A second debt from a 2012 ER visit to treat kidney stones totaled more than $4,000.

In both cases, debt collection agencies successfully sued Rose and filed garnishments.

Nebraska has a law that limits garnishments to 15 percent of after-tax income for wage earners with dependents. Rose, who is divorced and engaged to Goetzinger, qualifies.

But because creditors often don't know — and aren't required to find out — whether a debtor has dependents or not, they typically assume they don't, said Judge Craig McDermott, the presiding judge for Nebraska's 4th District, which includes Omaha, and a former general counsel for a debt collection agency.

The notice mailed to debtors allows them to request a hearing if they are incorrectly identified as "not head of a family," among other objections, but doesn't say doing so would lower the amount garnished.

Rose said she found out she could have her garnishment reduced when she called the collection agency that had sued to ask about lowering the amount. The attorney for the collector filed a motion in court, and Rose's take-home pay jumped by almost $100 each paycheck.

In Nebraska, there can be only one head of household. So even with the reduction for Rose, the family's income has been reduced overall by more than 20 percent.

"It makes you feel hopeless," said Rose, "that you're working for no reason and that you're never going to be able to succeed."

"I honestly dread paydays. Because I know it's gone by Saturday afternoon, by the time we go grocery shopping."

Chad Goetzinger of Ornah.s, ivhose paycheck is garnished


Federal law allows collectors to seize 25 percent of a debtor's paycheck for consumer debt. The law allows states to limit seizures to a smaller percentage. How much protection each state provides:

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