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An Overview of Garnishment
- Paychecks and other earnings
- Credit union and bank accounts
- State tax refunds
A creditor must sue you in court and get a judgment before it can garnish you. A creditor that files a lawsuit is the plaintiff in the case. If the creditor gets a judgment from the court that says you owe money, it is a judgment creditor.
A judgment is a court decision. It can be made by a judge, a jury, a magistrate, or sometimes a court clerk. If a judgment is for money instead of property or services, it’s called a money judgment. This article is about money judgments.
Before a creditor can garnish you, it must go to court and get a judgment against you. A court has to decide that you owe money. To learn more about collection cases in court, read the article Going to Court to Defend a Debt Collection Case.
How Garnishment Happens
After a court decides you owe the money, it will enter a judgment against you. The creditor must wait 21 days after the judgment is entered. Then it can get a Writ of Garnishment. This is a court order that tells the garnishee to give your money to the creditor. Paying the judgment within 21 days of the judgment will prevent garnishment.
Once the court issues a Writ, the creditor must serve it on the garnishee before it expires. The garnishee has seven days to serve the Writ on you by mailing or giving you a copy.
The garnishee also has 14 days to send a Garnishee Disclosure to the court, the creditor, and you. The disclosure states what money the garnishee controls. For example:
- Your employer controls your paycheck;
- Your bank controls your accounts;
- Your tenant has control of any rent money owed to you; and
- The Michigan Department of Treasury has control of your state tax refund.
The garnishee must withhold the funds from you right after sending the disclosure. This means you might not be able to get money that was garnished from your bank. So, you may not get all the money you earned in your paycheck because part of it will go to your creditor.
The garnishee holds the money for 28 days. This is so you have time to object to the garnishment. If you do not file an objection with the court, the garnishee will give the money to your creditor.
When you get a writ of garnishment, you have 14 days to file an Objection to Garnishment. Read the article Objecting to Garnishments to learn more.
After a writ of garnishment expires, a creditor can go to court for more writs to collect all the money you owe.
Types of Garnishment
There are two types of garnishment: periodic and non-periodic. You can be garnished periodically and non-periodically at the same time for the same debt.
A periodic garnishment lets the creditor take money from a source that pays you on a regular basis, such as your earnings or income from rental properties. Your earnings include your hourly wage or salary and any commissions or bonuses you might get. It also includes payments from a pension or retirement plan.
Writs for periodic garnishments do not expire. They are effective until the balance of the judgment is paid. (This is a new rule as of October 1, 2015.)
Limits on Periodic Garnishments
There are limits on how much a creditor can take from your earnings. Generally, no more than 25% of your disposable earnings can be garnished. Your disposable earnings are money you get after legally required deductions from your paycheck. Legally required deductions are taxes and social security payments. They are not deductions for insurance, pension plans, or employee savings plans.
Your Employer Doesn’t Have a Choice
An employer must start deducting from your paycheck for the first full pay period after receiving the notice. In Michigan, it’s illegal for your employer to fire you or punish you in any way because of a garnishment.
Different Limits for Child Support
If the garnishment is for a child support or alimony order, much more of your disposable earnings can be taken: up to 50% of your disposable earnings. If you're not supporting other kids at home, it could be for 60% of your disposable earnings.
A non-periodic garnishment is a one-time garnishment. It’s usually applied to your bank account or state tax refund. If a one-time garnishment is not enough to pay off what you owe, the creditor may get another garnishment.
Tax garnishment is a type of non-periodic garnishment that lets creditor garnish your tax refund through the Michigan Department of Treasury. Read the article Garnishment of Tax Refunds to learn more.
If there has been a judgment against you, you have some options to avoid garnishment.
Pay In Full
If possible, pay off the debt in full and as soon as possible. If you pay your debt within 21 days of the judgment, the creditor will not be able to get a garnishment.
Negotiate a Payment Plan
If you can’t repay your debt in full, you might be able to avoid garnishment by contacting your creditor directly and negotiating an installment plan to pay your debt. If you and your creditor agree to a payment plan, make sure to get it in writing.
File a Motion for Installment Payments
You can also ask the court for an installment payment plan by filing a motion. If the judge orders installment payments, you can pay the judgment in small amounts over time.
An installment payment plan only stops periodic garnishment, such as wages. Your creditor can still get a non-periodic garnishment, such as a garnishment of your bank account or state tax refund.
If you miss a payment, then your creditor can ask the court to set aside the installment payment plan and begin to garnish. Be sure to make every payment on time.
Read the article Getting an Installment Payment Plan to learn more about this.
The last resort scenario to stop garnishment is also the most drastic: you can file for bankruptcy. Filing for bankruptcy stops all garnishment. But bankruptcy has very serious consequences. You may want to discuss this option with an attorney before making this decision.
Many types of assets are exempt from garnishment. Read article Garnishment Exemptions to learn about them.