Printable Format16a-3-305. (UCCC) No assignment of earnings. (1) No creditor may take an assignment of earnings of the consumer for payment or as security for payment of a debt arising out of a consumer credit transaction. An assignment of earnings in violation of this section is unenforceable by the assignee of the earnings and revocable by the consumer. This section does not prohibit an employee from authorizing deductions from such employee's earnings if the authorization is revocable.
(2) A sale of unpaid earnings made in consideration of the payment of money to or for the account of the seller of the earnings is deemed to be a loan to the consumer secured by an assignment of earnings.
History: L. 1973, ch. 85, § 51; L. 2024, ch. 6, § 73; January 1, 2025.
KANSAS COMMENT, 2010
The U3C recognizes the potential for hardship to a consumer and his or her dependents that could result from a disruption of the steady flow of family income. Just as K.S.A. 60-730 prevents a creditor from attaching unpaid earnings of a debtor before obtaining a judgment, this provision precludes a creditor from reaching the debtor's earnings pursuant to an irrevocable wage assignment obtained from the debtor. The purpose of both limitations is to afford the debtor an opportunity to have the debt determined by a court before the debtor's unpaid earnings are taken by a creditor. This provision prohibits a creditor from taking either an assignment of earnings as payment or as security for payment for a debt or a sale of earnings in payment of the price or rental. Under K.S.A. 16a-1-301(21), the definition of "earnings" includes periodic payments under pension, retirement, or disability programs; thus this section also prohibits assignments of these entitlements.
A revocable payroll deduction authorization in favor of a creditor, as frequently used by credit unions, is authorized by this section. The F.T.C. Credit Practices Rule, 16 C.F.R. Part 444, prohibits irrevocable assignments of earnings, but permits certain irrevocable payroll deduction plans. Under this section, however, payroll deduction plans are permitted only if they are revocable. See also K.A.R. 75-6-23 requiring a separate form for authorizing a revocable payroll deduction that contains a clear and conspicuous notice to the debtor that the deduction may be revoked at any time and that must be worded so that the form may be used for revoking the deduction.
Law Review and Bar Journal References:
"The New Kansas Consumer Legislation," Barkley Clark, 42 J.B.A.K. 147, 198 (1973).
"Commercial Transactions Under the New Bankruptcy Act," Paul B. Rasor, 48 J.B.A.K. 199, 211 (1979).
"History & Overview of the Uniform Consumer Credit Code," Ryan E. Hodge, J.K.T.L.A. Vol. XXVI, No. 3, 8 (2003).
CASE ANNOTATIONS
1. Mentioned in upholding provision in Blue Cross insurance service contracts rendering benefits personal and nonassignable. Augusta Medical Complex, Inc. v. Blue Cross of Kansas, Inc., 230 Kan. 361, 364, 634 P.2d 1123 (1981).