Michigan is well known for its welcoming people, incredible academic institutions, and culture which values team sports and cooperation. However, tough economic times have wrought job losses, repossessions, and a slew of maladies that have caused Michiganders to fall behind on payments or other financial obligations. While understandable, creditors will still work diligently to get payments no matter the method, one of which is wage garnishment. In the following, we will examine the Michigan garnishment laws.
Using a process called wage garnishment, creditors seek the assistance of a Michigan court in working to obtain money owed to the creditor through a paycheck deduction. Depending on the type of creditor, the deduction after taxes could range from 25% to 50% of a paycheck, in addition to any sort of federal penalties. Wage garnishment is a last-ditch attempt by many creditors to collect a debt so an attempt to pay should be made before the situation reaches such a legally critical stage.
What is a wage garnishment action in Michigan and what does it mean for me?
In Michigan, like in much of the country, a wage garnishment action is a creditor’s attempt to collect a debt which is past due for any goods or services provided. Typically, after exhausting reasonable efforts to work out a payment plan or other arrangement with a debtor, a creditor will seek a writ of garnishment in a Michigan court. After providing sufficient proof, a judge will likely grant the writ of garnishment and the creditor will then notify the debtor’s employer. The employer will then deduct the garnished wages and send them to the creditor until the debt is satisfied per the writ of garnishment. The remaining amount of money will then be disbursed to the employee/debtor as regular wages.
Can all income in Michigan be garnished?
Michigan statutes expressly garnish periodic payments to an individual as the subject of wage garnishment. In this vein, a periodic payment under Michigan law would mean a salary, wage, commission, earnings, rent payment, payment from a contract for land and other payments. This fairly broad definition encompasses most of what many Michiganders would consider to be income.
What types of debt are able to be collectible under wage garnishment in Michigan?
In Michigan, debts of any and every kind are collectible under a writ of garnishment if not paid. Some, like delinquent child support, have a higher priority than others, such as a delinquent credit card, but every debt incurred by an adult is subject to collection which can potentially end in a wage garnishment action.
What is the process for obtaining a writ of garnishment in Michigan and how does it differ from other states?
Similar to other states, Michigan’s process for obtaining wage garnishment involves a creditor filing a writ of garnishment with a Michigan court. However, a creditor must ensure proper service of process on the employer garnishing the wages. Michigan is truly unique in that, every 6 months, there must be, from the creditor, a report demonstrating payments made via wage garnishment and how those payments have been applied to the total debt in addition to the amount of money remaining to be paid. In addition to garnishing your wages, a creditor or a government agency may choose to pursue your tax refund, if any is due.
Do I have any defenses for a writ of garnishment in Michigan or garnishing wages?
Oftentimes, once a debtor has reached the writ of garnishment stage with a creditor in Michigan, there are very few legal defenses available to the debtor to stop the writ of garnishment. However, that is not to say that a debtor is fully without legal recourse. Below are a few defenses to a writ of garnishment in Michigan.
- The debt has been paid in full
- The debtor and creditor have agreed to a payment plan and that plan is currently in effect and the debtor is making on-time payments
- The writ of garnishment seeks an amount of money which is in excess of federal and/or state limits
Although not a defense, Michigan has strict protections regarding employment or potential employment for those subject to a writ of garnishment. The law in Michigan makes it illegal to refuse to hire someone, fire, penalize, or take other adverse action professionally against someone due only to the fact that their wages are being garnished.
How much money can be garnished from my paycheck under Michigan law and does it matter if there is an order in which the garnishment is received?
Michigan law recognizes that the first to get to the courthouse in wage garnishment is often the first to get paid
While some states do not make any sort of wage garnishment protection explicit in their statutory schemes, Michigan ‘s law does. Much like federal law, Michigan wage garnishment law caps the maximum amount of money that can be deducted from an individual’s paycheck for wage garnishment to 25% of disposable income. If you are paid an hourly wage, an employer can only garner disposable earnings after 30 times the federal minimum wage. In both cases, disposable income is defined as income due to the employee/debtor after all applicable federal and state taxes have been taken out of the employee/debtor’s check.
Tracking federal law, no matter the number of creditors one has, the 25% cap holds except for very specific child support circumstances in Michigan. One of the unique provision of Michigan law, the first creditor in line – that is, the first to file for a writ of garnishment – gets priority over all others except for child support or tax liability wage garnishment actions. In this way, Michigan law encourages creditors to “rush to the courthouse” for fear of being left behind and without the money due to them if others get in the way.
In the case of child support matters, up to 50% of your paycheck can be garnished to fulfill child support obligations. These obligations will be proverbially first in line among creditors thus even if other creditors have filed prior to any child support filing, the child support filing and money due will take precedence.
Are there any federal protections when it comes to wage garnishment?
Under federal law, only 25% of your disposable income earnings can be garnished by creditors no matter the number of creditors you have. However, federal law is less generous with certain categories of creditors who are not private creditors such as a hospital, bank, or other company seeking a writ of garnishment.
The IRS is able to garnish your earnings without a court order to satisfy a tax debt and, similarly, creditors who extended credit for defaulted student loans are able to garnish your disposable income to the tune of 15%. Finally, for those who have defaulted on child support, 50% of a person’s disposable income is able to be garnished if that person is currently supporting a spouse and/or another child. If not, up to 60% may be garnished with a potential 5% penalty if the child support is more than 12 weeks late in order to make up the payments.
What do I do if I’m a Michigander who has been served a writ of garnishment?
If you have been the subject of a wage garnishment action in Michigan, you should contact an experienced attorney who can help ensure that your rights are preserved. You should not delay in speaking to a qualified lawyer who will fight for your interests.
Sources:
https://www.dol.gov/agencies/whd/wage-garnishment
https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs30.pdf