This legal guide provides a brief overview of the garnishment process in Michigan. Many Michiganders endure wage garnishments, garnishment of bank accounts, or garnishment of state income tax refunds from creditors to pay outstanding debts.
The Process of Wage Garnishment
The process of wage garnishment begins when a creditor goes to court against you to settle an outstanding debt. If the court decides that you do owe money to that creditor, they will enter a judgment against you. After a 21-day waiting period, the creditor can obtain a Writ of Garnishment, which they can then serve upon you to garnish your wages or other funds, like your tax return or a bank account.
Types of Wage Garnishment
There are two types of wage garnishment- periodic and non-periodic. You can be garnished periodically and non-periodically at the same time for the same debt.
Periodic Wage Garnishment
A periodic garnishment allows a creditor to take money from a source that pays you on a regular basis. They are able to garnish as much as 25% of your paycheck (after taxes) via court order until the debt is paid off. Your employer does not have a choice in the matter- once they are served with a court order, they must comply. If the garnishment is for child support or alimony, it is possible to take as much as 50-60% of your disposable earnings.
Non-Periodic Wage Garnishment
Non-periodic garnishments happen once and are usually applied to state tax refunds or your bank account. This order allows a creditor to place a lien on your bank account and claim the amount of money in the judgment.
Funds Exempt From Garnishment
Though there are certain exemptions, such as income from social security, the burden of proof is on the garnishee. This means the garnishee is responsible to prove that the garnished funds are exempt, which you can do by submitting an #MC-49 form to the court. A hearing will be scheduled after you file the form, and the court will not allow the garnishment to continue if they find your exemption claim to be legitimate.
Installment Payment Plans
You have the option of setting up an installment payment plan to repay the debt, either with the creditor directly or through the court. Installment payment plans will not protect you from non-periodic garnishments, such as bank account or tax refund garnishments. The court has the option of rejecting your payment plan. For example, if they believe you have the ability to make higher payments than what you have outlined you will pay on the debt, they might reject your payment plan. If your plan is approved, be sure to make all payments in full and on time- your creditor can file a Motion to Set Aside the Order for Installment Payments, and if the court agrees, your wages will once again be garnished.
The only way to completely stop a garnishment is to file bankruptcy. The automatic stay put in place after you file your case will protect you against creditors' attempts to garnish you or collect on debts while your case is processed.
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