How to Use a Garnishment Effectively
Daniel E. Best
Weltman Weinberg & Reis Co. LPA
Troy
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VII.
Garnishment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Periodic Garnishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Periodic Garnishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Garnishments as Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interrogatories to Garnishee Defendant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Failure to Disclose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I.
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Garnishment
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Michigan law permits creditors to is garnishments after the creditor obtains a
judgment. There are prejudgment garnishments, but those will not be discussed.
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Governed by MCR 3.101.
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There are two types of garnishments (Tax Garnishments are not discussed):
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periodic garnishments, typically sent to employers, but are applicable to any periodic payments other than interest payments;
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non-periodic garnishments, which are typically sent to banks/credit unions.
II.
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Periodic Garnishments
Allows creditor to attach debtor’s wages for 180 days
Should consider a Proceeding Supplemental for recurring non-earnings type
payments extending beyond 180 days
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Court charges $15 fee; employer must be paid $6 disclosure fee
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Garnishment must be served upon employer in same manner as a complaint
Court must have jurisdiction over the Garnishee
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Does not matter that debtor has moved (see contrary result of non-periodic garnishments)
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Within 14 days of being served employer must disclose:
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If debtor is employed
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Creditors' Rights 2013, June 6, 2013
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Pay frequency (weekly/biweekly/monthly)
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If garnishments/orders with higher priority exist against debtor’s wages
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Another creditor’s garnishment that was served prior has higher priority
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Your garnishment is not effective until either the prior garnishment is paid off or
expires
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Other orders may have higher priority regardless of when served on employer
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Employer must make first payment by the 28th day after being served
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Subsequent checks are sent on following pay periods
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Employer may be held responsible for paying judgment if it fails to file disclosure or make required payment
III. Non-Periodic Garnishment
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Allows creditor to attach any money owed to debtor, including interest payments
currently due the debtor
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Court charges $15 fee; garnishee must be paid $6 disclosure fee
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Garnishment must be personally served upon garnishee
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Court must have jurisdiction over the property being garnished
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Garnishee cannot waive jurisdiction, only debtor can
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Within 14 days of being served: garnishee must disclose whether or not he is
indebted to debtor and amount of indebtedness
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If garnishee is indebted to debtor, employer must make payment within 28 days
of being served
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If garnishee fails to file disclosure or make payment, he may be held responsible
for payment of judgment
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This is uncommon for Non-Periodic payments
IV. Right of Setoff
MCL §440.9340 provides that…“a bank with which a deposit account is maintained
may exercise any right of recoupment or setoff against a secured party that holds a security
interest in the deposit account.” Id. Moreover, MCL §440.9102(1)(h) defines “bank” as
“an organization that is engaged in the business of banking. The term includes savings
banks, savings and loan associations, credit unions, and trust companies.” Id. (emphasis
added). Finally, the Michigan Court Rules recognize that a garnishee-defendant may claim
any setoffs available to it against the principal defendant in a garnishment action when
determining its liability to the principal defendant; the claim of the garnishee-defendant
will have priority over the plaintiff’s claim with regard to the property being garnished.
MCR 3.101(H)(1)(a). See also Blow v. Blow, 134 Mich App 408, 350 NW2d 890 (1984).
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© 2013 The Institute of Continuing Legal Education
How to Use a Garnishment Effectively
V.
Garnishments as Lawsuits
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A garnishment is actually a lawsuit against the employer or credit union.
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Creditor files a writ of garnishment with the court and is required to then serve
the garnishment on the employer or credit union, known as the “garnishee defendant.”
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Garnishment usually served by mail, but sometimes it is prudent to use a court
officer to perfect service.
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Writ of garnishment acts as the complaint.
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Upon receipt the garnishee defendant must provide a copy of the garnishment to
the employee or member within seven days.
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More importantly, the employer must file a garnishment disclosure with the court
and send a copy of the disclosure to the creditor’s attorney and to the employee
within 14 days.
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Garnishment disclosure acts as garnishee defendant’s answer.
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MCR 3.101(M) discusses determining a garnishee’s liability and provides that
where there is a dispute, “the issue shall be tried in the same manner as other civil
actions.”
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MCR 3.101(M)(2) provides that the “facts stated in the disclosure must be
accepted as true unless the plaintiff has served interrogatories or noticed a deposition” within the allotted time.
VI. Interrogatories to Garnishee Defendant
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Creditors are entitled to send interrogatories to the employer within 14 days after
the employer files the garnishment disclosure.
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Interrogatories are written questions the creditor may have about the garnishment
disclosure.
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Employers may object to providing this information in their response to the interrogatories, and the creditor is then required to file a motion with the court. Furthermore, the process of considering the sufficiency of a garnishee disclosure “is
comparable to action on a motion for summary disposition pursuant to MCR
2.116(C)(9).” Blue Water Fabricators, Inc v New Apex Co, Inc, 205 Mich App
295, 299; 517 NW2d 319 (1994).
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The Michigan Supreme Court recognizes a party seeking garnishment must
strictly comply with the statutory requirements. See Detroit Fidelity & Sur Co. v.
Bushman, 262 Mich. 304, 247 NW 190 (1933); Detroit Independent Oil Co. v.
Miller, 235 Mich. 191, 209 NW 102 (1926).
VII. Failure to Disclose
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If the garnishee fails to disclose, creditor will move for entry of judgment.
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Creditors' Rights 2013, June 6, 2013
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Creditor will seek the full amount of the judgment.
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Catch-22: MCR 3.101(G)(2)
© 2013 The Institute of Continuing Legal Education