Laws Regarding Wage Garnishment in Michigan
When a debt is owed by court order, such as in a lawsuit or monies owed the IRS, the creditor can request a portion of the an employee's earning be held and paid directly toward the debt through garnishment. Michigan laws include specific guidelines on the type of garnishment that can be awarded, when a garnishment order can be appealed and how much can be withheld.
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Request for Garnishment
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After receiving a judgment from the court stating the money is owed by the other party or the debtor, the plaintiff--or the creditor--must wait at least 21 days before an order for garnishment can be filed.
Michigan has three types of orders for garnishment, specified as periodic, nonperiodic or income tax refund garnishment. A periodic writ of garnishment will allow for the debtor's salary along with any monies collected in the form of rent or land contract payments to be used to settle the dispute. This type of order is valid for 91 days or until the debt is paid off, whichever comes first.
A nonperiodic writ uses money in a bank account, other than money directly deposited such as child support or wages and other items to be used as payment toward the debt. Unlike the periodic garnishment, payment can only be withdrawn once. After that, if the debt remains another writ must be granted by the court.
In Michigan, a state income tax refund may be garnished by court order to pay a debt. However, as is the case of the nonperiodic writ, once money from the state tax refund has been garnished, the writ is no longer good and another will be necessary to collect additional money. While state of Michigan income tax refunds can be garnished, federal and city income tax refunds are not subject to garnishment in Michigan.
Objection
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Michigan laws allow for an objection to a writ of garnishment to be filed with the circuit court if the garnishee has an existing bankruptcy pending, the funds or property are not appropriate for garnishment, another garnishment is already in place and the total will exceed the maximum amount permitted by law to be withheld, the debt has been paid in full or the garnishment order was not legally executed.
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Maximum withheld
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Federal regulations within the Consumer Credit Protection Act dictate how much of an employee's earnings may be withheld by writ of garnishment. In most cases, the allowed amount is 25 percent of disposable earnings. If garnishment is necessary for child support payments, federal or state taxes, or bankruptcy, the allowed amount increases to 50 percent of disposable income. If garnished wages are used for child support and the garnishee is not supporting a spouse or child, the amount increases to 60 percent.
Disposable income or earning is defined as the money left after all required deductions such as federal, state and local taxes, social security and unemployment insurance contributions have been subtracted. Deductions such as retirement contributions, health insurance and union dues are not considered required deductions. (Ref 2)
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References
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