MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari in this case, 414 U.S. 1091 (1973), to resolve the conflict among the Courts of Appeals
On January 5, 1972, petitioner filed a voluntary petition in bankruptcy. With the exception of a 1962 Corvair automobile which the trustee abandoned as an asset upon the bankrupt's payment of $25, the sole asset claimed by the trustee in bankruptcy was an income tax refund entitlement for $250.90. On February 3, 1972, the referee in bankruptcy entered an ex parte order directing petitioner to turn the refund over to the trustee upon its receipt. The bankrupt moved to vacate that order and, after a hearing, the referee denied the motion. In mid-February 1972, petitioner filed his income tax return for the calendar year 1971. Several weeks later, he received his refund check from the Internal Revenue Service. Upon its receipt, petitioner complied with the order of the trustee but filed a petition for review of the referee's decision in the United States District Court.
(1)
We turn first to the question of whether petitioner's income tax refund was "property" within the meaning of § 70a (5) of the Bankruptcy Act. The term has never been given a precise or universal definition. On an earlier occasion, in Segal v. Rochelle, 382 U.S. 375 (1966), the Court noted that " `[i]t is impossible to give any categorical definition to the word "property," nor can we attach to it in certain relations the limitations which would be attached to it in others.'" Id., at 379, quoting Fisher v. Cushman, 103 F. 860, 864 (CA1 1900). In determining the term's scope—and its limitations—the purposes of the Bankruptcy Act "must ultimately govern." 382 U. S., at 379. See also Lines v. Frederick, 400 U.S. 18 (1970); Local Loan Co. v. Hunt, 292 U.S. 234 (1934).
In applying these general considerations to the present situation, there are some guidelines. In Burlingham v. Crouse, 228 U.S. 459 (1913), for example, the Court stated:
See also Wetmore v. Markoe, 196 U.S. 68, 77 (1904); Williams v. U. S. Fidelity Co., 236 U.S. 549, 554-555 (1915); Stellwagen v. Clum, 245 U.S. 605, 617 (1918). On two rather recent occasions, the Court has applied these general principles to the precise statutory section and to the precise term at issue here. In Segal v. Rochelle, supra, the Court said:
At the same time, the Court noted that this construction must be tempered by the intent of Congress "to leave the bankrupt free after the date of his petition to accumulate new wealth in the future," ibid., and thus "make an unencumbered fresh start," id., at 380. Several years later, in Lines v. Frederick, supra, these same considerations were repeated in almost identical language. 400 U. S., at 19. Segal and Lines, while construing § 70a (5) in almost identical language, reached contrary results. In each case, the Court found the crucial analytical key, not in an abstract articulation of the statute's purpose, but in an analysis of the nature of the asset involved in light of those principles.
In Segal, supra, this Court held that a business-generated loss carryback tax refund—which was based on prebankruptcy losses but received after bankruptcy—
In Lines, supra, on the other hand, the Court held that vacation pay, accrued prior to the date of filing and collectible either during the plant's annual shutdown for vacation or on the final termination of employment, does not pass to the trustee as § 70a (5) property. As in Segal, supra, the Court analyzed the nature of the asset in the light of the dual purposes of the Bankruptcy Act. It concluded that such vacation pay was closely tied to the bankrupt's opportunity to have a "`clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.'" 400 U. S., at 20, quoting Local Loan Co. v. Hunt, supra, at 244.
The income tax refund at issue in the present case does not relate conceptually to future wages and it is not the equivalent of future wages for the purpose of giving the bankrupt a "fresh start." The tax payments refunded here were income tax payments withheld from the petitioner prior to his filing for bankruptcy and are based on earnings prior to that filing. Relying on Lines, however, petitioner contends that the refund is necessary for a "fresh start" since it is solely derived from wages.
Petitioner is correct in arguing that both this tax refund and the vacation pay in Lines share the common characteristic of being "wage based." It is also true, however, that only the vacation pay in Lines was designed to function as a wage substitute at some future period and, during that future period, to "support the basic requirements of life for [the debtors] and their families . . . ." Ibid. This distinction is crucial. As the Court of Appeals noted, since a "tax refund is not the weekly or other periodic income required by a wage earner for his basic support, to deprive him of it will not hinder his ability to make a fresh start unhampered by the pressure of preexisting debt," 479 F. 2d, at 995. "Just because some property interest had its source in wages . . . does not give it special protection, for to do so would exempt from the bankrupt estate most of the property owned by many bankrupts, such as savings accounts and automobiles which had their origin in wages." Ibid.
We conclude, therefore, that the Court of Appeals correctly held that the income tax refund is "sufficiently rooted in the prebankruptcy past"
(2)
Our disposition of the first issue requires that we turn next to the petitioner's contention that 75% of the refund is exempt under the provisions of the Consumer
An examination of the legislative history of the Consumer Protection Act makes it clear that, while it was enacted against the background of the Bankruptcy Act, it was not intended to alter the clear purpose of the latter Act to assemble, once a bankruptcy petition is filed, all of the debtor's assets for the benefit of his creditors. See, e. g., Segal v. Rochelle, 382 U.S. 375 (1966). Indeed, Congress' concern was not the administration of a bankrupt's estate but the prevention of bankruptcy in the first place by eliminating "an essential element in the predatory extension of credit resulting in a disruption of employment, production, as well as consumption"
See also id., at 7. In short, the Consumer Credit Protection Act sought to prevent consumers from entering bankruptcy in the first place. However, if, despite its protection, bankruptcy did occur, the debtor's protection and remedy remained under the Bankruptcy Act.
The Court of Appeals held that the terms "earnings" and "disposable earnings," as used in 15 U. S. C. §§ 1672, 1673, did not include a tax refund, but were limited to "periodic payments of compensation and [do] not pertain to every asset that is traceable in some way to such compensation." 479 F. 2d, at 997. This view is fully supported by the legislative history. There is every indication that Congress, in an effort to avoid the necessity of bankruptcy, sought to regulate garnishment in its usual sense as a levy on periodic payments of compensation needed to support the wage earner and his family on a week-to-week, month-to-month basis. There is no indication, however, that Congress intended drastically to alter the delicate balance of a debtor's protections and obligations during the bankruptcy procedure.
It is so ordered.
FootNotes
"(a) The trustee of the estate of a bankrupt . . . shall . . . be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this title . . . to all of the following kinds of property wherever located . . . (5) property, including rights of action, which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered . . . ."
It is undisputed that the refunds could have been transferred under Connecticut law at the time of the filing of the petition, cf. Segal v. Rochelle, 382 U.S. 375, 381-385 (1966).
"(a) Maximum allowable garnishment.
"Except as provided in subsection (b) of this section and in section 1675 of this title, the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed "(1) 25 per centum of his disposable earnings for that week, or "(2) the amount by which his disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 206 (a) (1) of Title 29 in effect at the time the earnings are payable,
"whichever is less. In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2).
"(b) Exceptions.
"The restrictions of subsection (a) of this section do not apply in the case of "(1) any order of any court for the support of any person.
"(2) any order of any court of bankruptcy under chapter XIII of the Bankruptcy Act.
"(3) any debt due for any State or Federal tax.
"(c) Execution or enforcement of garnishment order or process prohibited.
"No court of the United States or any State may make, execute, or enforce any order or process in violation of this section."
"For the purpose of this subchapter:
"(a) The term `earnings' means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.
"(b) The term `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.
"(c) The term `garnishment' means any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt."
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