Michigan allows judgment creditors to garnish funds owed to a judgment debtor through a periodic garnishment (which is typically sent to an employer), a non-periodic garnishment (which typically seeks to seize funds in a bank account) and a tax garnishment. Recently, Michigan amended its statute governing periodic garnishments, MCL §600.4012, effective for garnishments filed after September 30, 2015. The amended statute provides:
- That a periodic garnishment remains in effect until the balance of the judgment is satisfied.
- An increase from the current $6 fee to a $35 fee that must be paid to the garnishee at the time a garnishment is served on the garnishee.
- A new requirement that plaintiff provide the garnishee and defendant a statement of the remaining balance of the judgment at least once every six months while a garnishment remains in effect.
- If a garnishment of periodic payments is suspended by an installment payment order that is subsequently set aside, the garnishment retains its priority.
- A requirement that a plaintiff give the garnishee and defendant a release of garnishment within 21 days after the balance of the judgment has been paid.
The revised statute also provides additional protections to an employer that fails to file the required disclosure or to withhold funds. These protections include:
- Prohibiting a plaintiff from requesting a default to be entered against a garnishee unless the garnishee fails to file a disclosure within 14 days after service of a garnishment or otherwise perform a required act, and does not cure the failure within 28 days, as provided in the statute.
- Allowing a garnishee to cure an identified failure after entry of default but before a default judgment is entered.
- Allowing a plaintiff to file with the court a request for default judgment after a default has been entered.
- Requiring the court, on the garnishee's motion, to reduce and/or set aside a default judgment under certain circumstances.
- Providing that a garnishment or a notice of failure would not be valid or enforceable unless it was served on the garnishee in accordance with the Michigan Court Rules.
- Specifying that garnishments have priority in the order in which they are received, except that a child support order and an order and a levy to satisfy a tax liability have priority over a garnishment.
- While there is a modest cost increase, these amendments are good news for creditors as they will no longer expire, which will substantially reduce the time and expense to reissue, file and serve periodic garnishments on judgment debtors' employers.
