How to Stop a Garnishment in Michigan
WHAT IS THE GARNISHMENT PROCESS IN MICHIGAN?
Garnishment is one of several means by which a plaintiff who obtains a judgment against a defendant in Michigan may “execute” the judgment. That is, it is one of the ways in which the judgment creditor can obtain funds from the defendant in payment of the judgment amount.
A garnishment is a court-ordered process by which funds are seized either from a bank account, your wages, or your State of Michigan tax refund.
One the judgment is paid in full, the garnishment ceases. However, a garnishment—particularly of a paycheck—can cause a person an enormous amount of financial instability. Once a garnishment is in place, up to 25% of every paycheck can be diverted to the judgment creditor, in particular.
But what is it, and does it happen automatically?
MICHIGAN STATE COURT: THE ISSUANCE OF ORDERS OF GARNISHMENT
Potential clients that meet with us are often under the impression that their funds can be automatically garnished by a creditor which has simply filed a lawsuit in Michigan district or circuit court, which has merely threatened to file a lawsuit, or which has merely referred the matter to a collections department or company.
This is not the case.
As noted above, a garnishment is a means of executing a judgment already obtained. This means that, not only does the creditor have to sue you in order to garnish your funds, but the creditor must have won that lawsuit and received a judgment against you for some amount of money.
Once this is accomplished, if the creditor has the necessary personal information about you, your employment, your bank accounts, etc., the creditor can then file a Request and Writ for Garnishment (“periodic” or otherwise) with the court that issued the judgment in the lawsuit.
You have then 14 days from the date that the Request is delivered or mailed (i.e., stamped with proper postage and placed in a mailbox with your address) to file an Objection to the Request.
If no Objection is filed, the court will grant the request by default.
If you do file an objection, the court will schedule a hearing as to the question of whether the garnishment should be granted. That hearing will be docketed according to the court’s calendar, but it will generally be scheduled for the following month.
Thus, filing an Objection may delay the actual garnishment by as many as 30 days, even if you are unsuccessful at the hearing in convincing the judge that the Request should not be granted.
In Michigan, most district court judges will interpret any written communication complaining about the proposed garnishment as an Objection, and a hearing will be docketed upon receipt by the court. Communication with the court’s clerk as to how to file an Objection will, however, ensure that you do it properly on the off-chance that your judge interprets Michigan Court Rules concerning the proper formatting and service of pleadings very literally.
Once the objection is granted, and the Order granting the garnishment will then be served by the court to your bank, employer, or the Michigan Department of Treasury (for State tax refund garnishments).
An employer has 30 days to comply with the order and begin diverting up to 25% of your paycheck to the judgment creditor, once the Order is received.
Depending on a variety of other circumstances, between the hearing docketing time and the employer (or bank) compliance delay, that may be plenty of time to take further action to stop the garnishment, such as filing for bankruptcy.
BANKRUPTCY: STOPPING A GARNISHMENT PERMANENTLY
If all else has failed, the filing of a Chapter 7 or Chapter 13 bankruptcy will stop a garnishment dead in its tracks instantly.
The filing of a bankruptcy matter engages a Federal injunction called “the Automatic Stay against Collections” which requires that all creditors (with a very few limited exceptions, such as landlords holding possession judgments and child support recipients) cease and desist in any collections activity of any sort as of that moment of filing.
Bankruptcy is a Federal legal process which preempts (overrides) state legal processes, such as collections lawsuits and judgment executions of any sort, garnishments in particular.
Upon the filing of the bankruptcy, our attorneys will file with the district or circuit court in which you have been sued an Order of Administrative Closing due to Bankruptcy Stay. The state court judge will rubber-stamp and close the case down on the spot.
A judgment already signed will not be executable in this case. If an Order of Garnishment has already been granted, the creditor holding the judgment must file a Release of Garnishment with the court, which the court will then serve out to your employer, bank, or the Michigan Department of Treasury.
The timeframe for service of such releases varies greatly, depending on: A) the timely compliance of the judgment creditor; B) the speed with which the court serves the Release out; C) the speed with which the United States Postal Services manages to deliver the release; and D) the speed with which your employer (or bank, etc.) acts to comply with the Release and stop sending money.
Thus, it is always better to file the bankruptcy before a lawsuit goes to judgment or, at least, before the garnishment process has already begun.
What if you have already had funds garnished when you file the bankruptcy?
In a Chapter 7 bankruptcy, if the proper steps are taken in the preparation of your Bankruptcy Petition, the creditor will be required to return any funds garnished from a bank account or paycheck within the 90 prior to the filing of the petition—if the total amount is $600.00 or more in that time-period.
If the funds were garnished from a State of Michigan tax refund rather than your wages or bank account, the retrieval of these funds can be more complicated.
In a Chapter 13 bankruptcy, the retrieval of the funds can also be more complicated, depending upon the creditor and which Chapter 13 Trustee is assigned to your case. (The creditor cannot refuse to turn over such funds, but the question will be whether the creditor sends the money to you—or to the Chapter 13 Trustee. If you want the money returned to your pocket rather than to your Chapter 13 Plan, an experienced Michigan bankruptcy attorney with the ability to push back at creditors’ bluster is essential!)
STOPPING A GARNISHMENT IN MICHIGAN: THE BOTTOM LINE
The bottom line is that you need to retain an experienced attorney to represent you if you are being garnished or believe that you soon will be and particularly if you are considering bankruptcy as an option for dealing with it.
Contact The Law Offices of Walter Metzen & Associates now to schedule a no-cost, no-obligation initial consultation.