You owe a creditor money. Perhaps you made some bad investments or you were forced to pay significant medical bills when a loved one was in an accident or developed a severe illness. Now, you are past due on a hefty credit card bill. You discover that your creditor obtained permission for a garnishment by the court. What does that mean? How will this creditor’s garnishment affect your family? How can you make it stop?
Both federal and state laws govern garnishments.
Garnishments in Michigan
A garnishment is a financial imposition that is placed usually on either your wages or sometimes even your bank accounts. In essence, a garnishment allows a creditor or some other entity like the IRS to take money from your paycheck to satisfy the debt owed to them. Another common name is wage attachments. In order to be granted a garnishment order, the creditor must appear before a judge and prove their legal right to collect money from you to fulfill an unpaid and overdue debt. Keep in mind, the IRS has the power to garnish your wages without a judge’s approval.
Following approval from the court, the court sends the order directly to your employer. By law, your employer must send the directed amount to the creditor each paycheck. Michigan places caps on how much a creditor can petition for garnishment. Usually, the amount is 25% of your net pay (how much you actually take home after taxes).
In Michigan, there are several debts that a creditor cannot collect on through a wage garnishment order. A creditor cannot garnish wages if you owe child support, back child support payments (arrears), income taxes, and have student loans that are in default. Other states allow garnishment of child support, but Michigan does not.
Michigan follows federal law in regard to the amount of money garnished in each paycheck. According to the Department of Labor, in any given work week, creditors may petition for “the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage.”
This means that the federal government prohibits creditors from seeking so much of your wages that you would be left unable to pay your living expenses.
What you can do
Even with the limitations on garnishments, some people find it almost impossible to live on their remaining wages. In order to stop a garnishment order, there are a number of different actions you may be able to take, such as paying the debt in full or negotiating a payment plan with the creditor.
With the help of a skilled attorney like those at the law office of Maxwell Dunn, you may also be able to file a motion to set up an installment agreement or even pursue filing bankruptcy in order to cease having your wages garnished. If creditors are taking any type of extreme collections measures against you, such as garnishing your wages, please do not hesitate to call our knowledgeable attorneys today!