Garnishments Made Easier – Michigan’s Amended Garnishment Law
Michigan amended its garnishment law effective for garnishments filed after September 30, 2015. The amendments apply to periodic garnishments only. Periodic garnishments are the most common type of garnishments, and are served upon garnishees, such as employers, who make regular or periodic payments to a debtor. Non-periodic garnishments, such as garnishments sent to depository banks or other garnishees that may be holding funds in a lump sum amount or account for the debtor, are unaffected by the amendments.
Under the law in effect prior to the amendment, periodic garnishments had to be renewed every six months or they expired. Now, such garnishments remain in effect until the underlying judgment is satisfied. In addition, the garnishee disclosure fee is $35 instead of $6 under the prior law. Under the amended law, after receiving the first payment, the creditor is required to provide a statement of the balance remaining on the judgment, including interest and costs, to the debtor at least once every six months. The creditor must also provide the debtor and the garnishee, within 21 days after the balance of the judgment has been satisfied, a release of garnishment. In addition, garnishments not properly served upon a garnishee in accordance with the Michigan Court Rules will not be enforceable.
Under the amended law, a creditor will no longer have to reissue a garnishment every six months because the garnishment remains effect until paid in full. This reduces the costs to a creditor that has a sizable judgment against a debtor, as well the administrative expense and risks to a garnishee for oversights and errors in responding to renewed garnishments. However, garnishments have priority in the order they are received by the garnishee, i.e., a first-come, first-served basis. Therefore, other creditors will have to wait in line until a prior garnishment is satisfied. This can prove frustrating for those creditors who have no other means to collect upon their judgment except through a debtor’s wages.
The new law also provides more procedural protections for garnishees. Under the prior law, if a garnishee failed to timely file a disclosure, a creditor could have sought a default judgment against the garnishee for the full amount of the judgment against the debtor, including interest and costs. The garnishee’s remedy was to file a motion to set aside the default judgment. Under the amended law, if a garnishee does not timely file a disclosure or perform any other required act within 14 days after receiving the garnishment, the creditor must send a notice to the garnishee describing its error. The garnishee has 28 days to respond to the notice and begin withholding funds or performing another required act. If the garnishee still does not respond to the garnishment or to the notice sent by the creditor, then the creditor may request that a default be entered by the court against the garnishee. A creditor requesting a default judgment must send copies of the request for entry of default and request for the default judgment to the garnishee. The garnishee may comply with the garnishment after entry of the default, but before the default judgment, by mailing to the creditor, the debtor, and the court a disclosure stating that the garnishee will immediately begin withholding funds or begin complying with the garnishment. After entry of default judgment, the court may reduce the amount of the judgment if the garnishee certifies that the failure to comply was the result of administrative error. Even if a default judgment is entered against a garnishee, the garnishee can still file a motion within 21 days after the default judgment is entered explaining its failure to comply with the garnishment. If a default judgment is entered against a garnishee for not properly responding a garnishment, the new law allows the garnishee to recover from the debtor’s future wages or payments any amount that the garnishee was required to pay to the creditor.
Creditors, debtors and garnishees should become familiar with the amended garnishment procedures and requirements to be able to fully and correctly comply with them.