What you need to know about Garnishments – Garnishments 101
There are three types of garnishments: 1) Wage Garnishments; 2) Bank Account Garnishments; and 3) Tax Refund Garnishments. If a creditor obtains a judgment against you, they can garnish up to 25% of your gross wages. Gross wages are before anything comes out of your pay for payroll taxes, social security, health insurance, and any other payroll deductions. If you believe you are being garnished more than you can afford, you can file what is known as a Motion for Installment Payments to the court the garnishment is through. In that Motion, you state the amount per pay period you believe you can afford. If the creditor contests your Motion, a hearing is set before the judge so the judge can decide how much he or she thinks you can afford. The resulting amount you have to pay per pay period after that hearing is typically much lower than 25% of your gross wages.
Bank Account Garnishments allow a creditor who has a judgment against you to hit your bank account to pay itself. There are certain limitations to this. If the sole source of the income going into your bank account is social security income, the bank account cannot be garnished. But if there are other sources of income being deposited into that account, the funds become coming led and the funds lose their identity as social security money. In that scenario, funds in your bank account can be garnished even though some of the funds are social security money.
Tax Refund Garnishments are filed to the Michigan Department of Treasury so that when you are owed an income tax refund that refund is intercepted by your creditor who has a judgment against you. The garnishee disclosure will sit there at the Michigan Department of Treasury until you file an income tax return that indicates you are owed a refund. Instead of sending the refund to you, the Michigan Department of Treasury will send your refund to your creditor.
Your creditor cannot initiate any of the above three methods of garnishment until it has obtained a judgment against you. If you are served with a lawsuit it is very important to respond to the lawsuit in a timely manner. For more information about responding to a lawsuit, see my article entitled, “What to Do If You Are Served With a Lawsuit.”
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department
The Law Offices of Joumana Kayrouz, PLLC