If a creditor has a judgment against you for a debt, you might want an installment payment plan to repay the debt. You can set up a plan through court order or through an agreement with the creditor.
Getting an installment payment plan through a court order protects your wages from being garnished. Garnishment is a court process that lets a creditor collect money from a garnishee. A garnishee is a third party that has control of your money or pays you. For example, a garnishee could be a bank, employer, a tenant, or the State of Michigan.
An installment payment plan does not protect you from other garnishments, such as bank account or tax refund garnishments. To learn more about garnishments, go to I'm Being Garnished for a Debt That Is Not Child Support.
Getting A Court Ordered Installment Payment Plan
You must tell the court about your income and expenses when you ask for the installment payment plan.
You can ask the court to include a payment plan in the judgment if one hasn't been issued yet. After a judgment has been issued, you can file a motion for installment payments.
How Much Are the Payments?
You need to know how much you can pay toward the debt and how often. Base the installment payment plan on how much you can really pay. Consider all the money you have coming in and all your regular bills as well as irregular or unexpected ones.
The more you pay, the sooner you’ll pay off the judgment. If you try to make the plan last too long, your creditor may object to it. You’ll also pay more in interest.
You can contact your creditor and discuss your proposed plan before filing your motion with the court. This might help keep the creditor from objecting to your motion.
Make the terms as specific as possible. Include the amount of each payment and when it is due.
Applying for Your Installment Payment Plan
To apply for a court ordered installment payment plan, file a Motion for Installment Payments. Use the Do-It-Yourself Motion for Installment Payment Plan tool to create your motion. You will have to pay a fee to the court when you file the motion.
After you file your Motion send a copy to your creditor. It then has 14 days to object to your plan. If your creditor does not object, the court will grant your motion and issue an Order Regarding Installment Payments. When that happens, start making the payments.
If your creditor objects to your Motion, the judge will decide if the plan is acceptable. The judge might have a hearing to decide this, or the judge might decide to approve or deny your motion without a hearing.
At the hearing, the judge or hearing officer might change the payment plan. Be prepared to show the court why your suggested payments are reasonable, and why you can’t afford to pay more.
If Your Plan Is Rejected
If the court denies your Motion, you still have some options to avoid garnishment. You can file another Motion for Installment Payments with higher payments. To do that, you will have to pay a new filing fee. You can also try working directly with the creditor to set up a payment plan.
If you talk to your creditor to establish a payment plan, it will not be through a court order. It may not stop your creditor from garnishing your wages. As part of the agreement, ask your creditor not to garnish you unless you miss a payment . Make sure the payment plan you set up with your creditor is in writing.
If Your Plan Is Approved
If the court approves your plan, it will issue an Order Regarding Installment Payments. When that happens, start making payments according to the Order.
If you get a court-ordered plan and you are paying as ordered, your paycheck should not be garnished. If your paycheck is garnished, show your employer the court order for the payment plan. Your employer can’t stop garnishing you unless it has an order from the court telling it to stop. This should stop the garnishment. If you're still being garnished after that, you can file an objection to the garnishment with the court. You will need to include a copy of your Order Regarding Installment Payments with your objection. Read the article Objecting to Garnishments to learn how to do this.
Don’t Miss Payments
If you miss payments, your creditor can file a Motion to Set Aside the Order for Installment Payments. If that motion is granted, your creditor can garnish your wages.
If this happens, you will get notice that the Motion to Set Aside Order for Installment Payments was filed. After you get a copy of the motion, you have 14 days to request a hearing to object to it.
At the hearing, you will need to explain why you missed any payments. You will also need to explain why you are sure you can pay the rest of the payments in your plan.
If your installment payment plan is set aside, you can file a new Motion for Installment Payments. If you file the motion within 91 days of when your old plan was set aside, you will probably have to pay all the court costs.