A creditor must obtain a judgment before it may garnish a person’s wages. Once the creditor has obtained the judgment, it must file an Earnings Withholding Order to begin the garnishment process. The creditor must serve the Earnings Withholding Order on the employer and the employer must begin withholding a percentage of the employee’s earnings in satisfaction of the judgment. In Michigan, as much as 25% of an employee’s pay check may be withheld each pay period.
In Michigan, a debtor may stop wage garnishment by filing a Claim of Exemption form. The Claim of Exemption form can be obtained from the court in which the judgment was entered. The exemption form must be completed in its entirety and must be filed with the court along with supporting documentation including:
Once the Claim of Exemption form and all supporting documentation has been filed with the court, a hearing date will be set. At the hearing, the court will hear evidence and enter a ruling.
Another option to stop wage garnishment is bankruptcy. When a person files bankruptcy, the automatic stay immediately becomes effective. The automatic stay prohibits creditors from making any collection efforts against a debtor and the debtor’s property, including lawsuits and garnishments.
If a debtor files Chapter 7 bankruptcy, most of his unsecured debt will be eliminated. Because judgments are considered secured debts, a Chapter 7 debtor must file a Motion to Avoid Lien if he wishes to eliminate the judgment debt. If the motion is granted, the judgment will be treated as an unsecured debt and will be wiped out.
If your wages are being garnished, you should speak with a qualified Michigan debt settlement attorney as soon as possible. A debt settlement attorney will explain all of the options available to stop wage garnishment and will assist you in resolving your financial problems.