If an individual stops paying his credit obligations, a creditor will make attempts to collect debt. When unable to contact a debtor or to negotiate payment options with him, a creditor may sue him to pursue other debt collection options, such as garnishment. Michigan garnishment law does not deviate from the federal law, which exempts Social Security income from collection to repay debts.
Lawsuit Process
Lawsuit process is the same in all states. Before a creditor can garnish a debtor's bank account or wages, she must file a lawsuit against him. A creditor must prove in court that a debtor owes her the money. After a judge awards a judgment to her, a creditor can proceed with debt collection. She may choose to garnish a debtor's wages or his bank account. A creditor may choose to place a lien on other assets, such as bonds or property.
Bank Account Garnishment
When a creditor chooses to garnish a debtor's bank account, he must obtain a writ of garnishment from the court. A writ of garnishment is an order given by the court to the third party -- a debtor's bank -- to hold the funds for the judgment creditor. Upon receiving a writ of garnishment, a bank must place a freeze on all funds in the debtor's account. Any transactions, such as electronic payments or checks, must be returned. A debtor may have to pay returned-check fees on them as well. A bank must send an account holder a garnishment notice within two business days.
Exempt Funds
The law protects certain types of income during a garnishment process. A creditor may not take the funds that come from Social Security, disability, Supplemental Social Security benefits, public and student assistance, veterans' benefits, private and public pensions, unemployment benefits, workers' compensation, alimony or child support. If a debtor has any of these funds in her account, she should notify the bank and the judgment creditor about the exempt funds. She should also file an exemption form provided by her bank along with the garnishment notice to request a court hearing and have the exempt funds released.
Filing Exemption Form
A bank must notify an account holder about account garnishment and provide an exemption form, which explains his rights if he receives an exempt income, such as Social Security. A debtor must follow the instructions and file this form with the court before the deadline. The court will schedule a hearing for a debtor to explain his appeal. A debtor should provide proof of the sources of the funds, such as statements, letters and check stubs. Upon reviewing the documents, the court will order the bank to release the exempt funds.
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