If you owe a creditor money and fail to make your required payments, this lender may seek to get repaid by garnishing your wages. This means a percentage -- usually not more than 25 percent -- of your regular paycheck will be deducted and sent directly to the creditor instead of being paid to you.
The easiest way to stop wage garnishment is to work with your lenders before they obtain a court's permission to garnish your wages. Offer a payment plan and let them know you're sincere about repaying what you owe as soon as you can. In this situation, the court may instead give you an "installment payment order" that will avert garnishment as long as you make the payments.
If that doesn't work, and you believe one of your creditors is taking steps to garnish your wages, you may need to consider a quick bankruptcy filing. Whether you file for a Chapter 7 bankruptcy liquidation or a Chapter 13 bankruptcy reorganization plan, your bankruptcy filing will stop a wage garnishment from taking effect.
Once a lender gets the court's approval (known as a writ of garnishment) and begins making deductions from your wages, it will be more difficult to stop the paycheck deductions. One option -- if you find you can't live on the remaining wages, you can challenge the size of the garnishment by filing a Claim of Exemption form with the court your creditor used to start tapping your paychecks. You'll need to document your regular living expenses to show why your garnishment order should be reduced or cancelled.
Also, in Michigan a garnishment order expires after three months and a new writ must be obtained -- so that provides another chance to work out a deal or challenge the garnishment amount.
Another option, if you have the funds for it, is to simply pay the outstanding amount owed in a lump sum to stop the garnishment. In any case, when garnishments stop, be sure to get a document from the creditor confirming your loan has been paid off. If your credit has been damaged by the unpaid debt, you can use this documentation to help rebuild your credit rating.
Know that there are two kinds of garnishments that may reduce your paycheck by more than 25 percent. If you have unpaid child support, a court may approve garnishments of 50 percent or more of your wages. Also, if you owe federal taxes, know that the IRS does not need to sue you or get a writ of garnishment to begin taking substantial deductions from your paycheck to cover your tax bill.
Finally, if you do not earn enough income, your paychecks may not be garnished at all. Under federal law, if your income is minimum-wage or close to it, no withholding is permitted.
As you can see, the law surrounding wage garnishments is complex. To learn more about how to stop wage garnishments in Michigan, call an attorney today.