• Attorney Andrew Steiger

How to Stop Wage Garnishment

Anyone who has had their wages garnished knows that wage garnishment can cause financial problems to spiral out of control. Garnishment can be as high as 25% of a person's earnings after taxes. Stopping wage garnishment is often necessary to avoid further damage to a person's finances and credit score. This post covers the mechanics of wage garnishment in Michigan and options to deal with creditor enforcement.


What is Wage Garnishment?


Wage garnishment is an automatic withholding of a set amount from your paycheck by your employer to pay your creditor. Creditors typically attempt to garnish or take your wages because the process is predictable for creditors and the creditor does not have to deal with you directly to receive payment. Wage garnishment is limited to up to 25% of a debtor‘s earnings after statutory deductions. Most people subject to garnishment cannot pay normal living expenses after the garnishment takes effect.


Wage garnishment, once effective, will continue each paycheck until the debt is repaid. Creditors may also garnish state income tax returns to the extent of a refund. This may also occur automatically. This could be many years of reduced paychecks.


When Do Creditors Seek Wage Garnishment?


Creditors seek wage garnishment after normal attempts to collect a debt fails. Typically creditors have a good understanding of how much they can expect to collect on a debt as that debt ages. The older the debt, the less likely a debtor will pay the debt. Creditors also face a statute of limitations on unpaid debts. Michigan has a six year statute of limitations, although this may be "tolled" or extended if debtors make payments. Creditors may aggressively pursue a garnishment to avoid the debt becoming unenforceable due to the statute of limitations.


How Does Wage Garnishment Happen?


Wage garnishment occurs after a creditor obtains a judgment for non-payment of a debt. This requires the creditor going to court and filing a complaint for payment. The requirement is usually just the debtor owes the creditor and payment has not been made. Interest is also typically requested. A debtor then must file an answer to the complaint if a challenge is to be made.

The debt is typically unsecured and could be credit card debt, medical debt, local income tax debt or even gambling debt. Certain debts like IRS tax debts can be subject to garnishment, but the process the IRS uses is less onerous than for other debts.


Can You Stop a Wage Garnishment?


Strategies to stop a wage garnishment typically include statute of limitations, lack of proof that a debt is owed, and improper service of process on the debtor.

Garnishment is typically a last resort for creditors whose debtors will not pay or have not made a payment in a very long time. Wage garnishment automated the process.

It is possible to stop a wage garnishment. A debtor must respond to the complaint explaining why a debt is not owed. Prior payment, the wrong debtor, improper service, and the statute of limitations are common defenses.



Default judgments


If a debtor does not answer, the creditor will request a default judgment. It is difficult for a debtor to change a default judgment. Improper service and lack of notice are the common defense to a default, but courts are skeptical. A garnishment writ would typically be issued at this point.


Post Judgement Debtor Strategies to Stop Garnishment


A debtor who is looking to handle debt repayment in a manageable way should file an answer to a complaint to buy time. A debtor should attempt work with a creditor for a payment plan that is reasonable. A garnishment may take up to 25% of a debtor‘s wages.


Negotiate With Creditors


Debtors may attempt to repay creditors in a lump sum or threaten bankruptcy to negotiate a lower repayment amount, longer repayment plan than a garnishment or reduced interest rate. A debtor must consider whether he or she is eligible for bankruptcy.


Using Chapter 7 Bankruptcy to Stop Wage Garnishment


For debtors facing a long wage garnishment that will cause them severe financial hardship, bankruptcy should be considered. Chapter 7 may eliminate dischargeable debts like credit card debt, medical debt, back rent, etc.


Another benefit of bankruptcy is the automatic stay. The automatic stay stops pretty much all creditor collection and enforcement activity. Garnishments must stop and a portion of previously garnished wages may be returned to the bankruptcy estate. If a creditor has filed a lawsuit and the lawsuit is pending, that action must be put on hold. The state court must obey the bankruptcy court’s stay.


Debtors are usually concerned about losing assets to creditors in a Chapter 7 bankruptcy but exemptions may protect assets and often do. “No asset” cases do in fact occur where a debtor does not lose any assets.

Talk to a Detroit Bankruptcy Attorney Today


If you are facing financial hardship or wage garnishment, contact a Detroit Bankruptcy attorney to help you with a strategy to stop wage garnishment or file bankruptcy if that is the best option. Avoiding a lawsuit will only make repayment more difficult as a creditor with a wage garnishment order can sit back and receive the payments while you suffer. Take action today for a free consultation with attorney Andrew Steiger to understand your rights. Contact him at 248-259-6367 or fill out the contact form and he will reach out to you.


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