What is Wage Garnishment? When your wages are garnished, your employer is required to take a certain amount out of your paycheck and send it to the court (or, in some cases, directly to the creditor) until your debt is paid off. Most wage garnishments require a judgment and a court order, but there are some exceptions.

Michigan Wage Garnishment Limits

Michigan law protects most of your paycheck from wage garnishment. The amount available to a creditor depends on how much you earn. The amount that can be garnished is the lesser of:
  • 25% of your disposable income, or
  • The amount of disposable income left over after deducting 30 times the federal minimum wage
Disposable income is the amount left after legally-required deductions like taxes and Social Security contributions. Disposable income may be different from your net income because not all deductions are legally required. For instance, you may have retirement account contributions deducted from your paycheck, but they won’t be deducted when determining disposable income.

Stopping Wage Garnishment in Michigan

After a creditor obtains a judgment against you, they must wait 21 days to get a garnishment order. That means you can avoid garnishment by paying off the creditor before the 21 days runs out. Of course, most people facing garnishment can’t just pay off the debt in full. If that’s not an option, you may be able to avoid garnishment by reaching an agreement with the creditor. For instance, you may be able to settle the debt with a lump sum payment that is less than the full amount, or to work out a voluntary payment arrangement that doesn’t involve wage garnishment. You may also file a motion asking the court to allow you to make installment payments instead of having your wages garnished.

The Automatic Stay in Bankruptcy

If you can’t work out a reasonable payment plan with the creditor or can’t afford to make payments at all, you may be able to avoid or stop wage garnishment by filing for Chapter 7 or Chapter 13 bankruptcy. These two types of bankruptcy are very different, but they have one important thing in common. In most bankruptcy cases, a court order called “the automatic stay” is entered as soon as you file your bankruptcy petition. This order tells creditors and others to stop any collection action against you.
  • If the creditor hasn’t yet gotten a judgment against you, the automatic stay can prevent them from going to court, meaning that no garnishment order is entered.
  • If the creditor has a judgment against you but hasn’t yet obtained a garnishment order, the proceedings are halted and the order is not issued.
  • If the creditor has a garnishment order but your employer has not yet started withholding money from your paycheck, the automatic stay freezes the process.
  • If your employer is already withholding money to satisfy a judgment order, the automatic stay tells them to stop.
In some cases, if you act quickly, you may even be able to get back some of the money that has already been withheld from your paycheck. The automatic stay doesn’t last forever. But, it can interrupt wage garnishment while you work toward a longer-term solution. Say, for example, that a creditor has a wage garnishment order against you for an unpaid credit card bill. Credit card debt is typically dischargeable in Chapter 7 bankruptcy. So, the automatic stay could stop wage garnishment while the bankruptcy case is pending, then the debt could be discharged in the bankruptcy case.

Talk to a Saginaw Bankruptcy Attorney

To learn more about how bankruptcy can stop wage garnishment and more, talk with an experienced Michigan bankruptcy attorney. Josh Reinert’s law practice is focused entirely on helping people get out of debt and reclaim control of their financial lives. You can schedule a free consultation right now by calling 989-799-8860 or filling out the contact form on this page.

Types of Wage Garnishments in Michigan

In Michigan wage garnishment can occur for various reasons, including debts, child support, and tax obligations.

Here are the primary types of wage garnishments in Michigan:

This type of garnishment is typically associated with unpaid consumer debts, such as credit card debt, personal loans, or medical bills. A creditor who has obtained a court judgment against you can request a wage garnishment to collect the debt.
Child support is a legal obligation, and when a parent falls behind on payments, the state may initiate a child support garnishment. The Child Support Enforcement Division can work with your employer to withhold the required child support payments from your wages.
Similar to child support, spousal support (alimony) can also be garnished from your wages if you fail to make the required payments to your former spouse as outlined in a court order.
The Michigan Department of Treasury and the IRS can garnish your wages to collect unpaid state and federal taxes, respectively. The amount they can garnish depends on your income and the number of dependents you have.
The federal government can garnish your wages if you default on federal student loans. The garnishment is typically up to 15% of your disposable income, though there are limits to ensure that you have enough income left to cover your basic living expenses.
If a creditor obtains a judgment against you for various types of debts, including personal loans, credit cards, or medical bills, they can request a wage garnishment to collect the debt.

How Much Of Your Wage Can Be Garnished in Michigan?

Here are the key limitations on wage garnishment in Michigan:

Under federal law (CCPA), creditors and garnishment actions are generally limited to garnishing the lesser of:This means that a significant portion of your income is protected from garnishment.

1.  25% of your disposable earnings (earnings after taxes and other legally required deductions).

2.  The amount by which your disposable earnings exceed 30 times the federal minimum wage (currently $7.25 per hour).

When it comes to child support or spousal support (alimony), up to 50% of your disposable earnings can be garnished if you are supporting another spouse or child. If you are not, up to 60% can be garnished.
For unpaid federal taxes, the IRS can garnish a substantial portion of your income, but the exact amount depends on your specific circumstances. The IRS uses a complex formula to determine the amount they can garnish.
If your wages are being garnished for unpaid federal student loans, the garnishment can be up to 15% of your disposable income.

Can More Than One Creditor Garnish Your Wages at The Same Time?

Yes, it is possible for more than one creditor to garnish your wages at the same time. If you owe debts to multiple creditors, each of them may seek a judgment against you and subsequently initiate wage garnishment proceedings. However, there are legal limits to how much can be garnished from your wages, which are governed by federal and state laws, such as the Consumer Credit Protection Act (CCPA) at the federal level. The CCPA limits the total amount that can be garnished from your wages to ensure that you have enough income left to cover essential living expenses. In general, the CCPA allows a maximum of 25% of your disposable earnings to be garnished for most types of consumer debts, like credit card debts and personal loans. This 25% limit is the cumulative total that applies to all garnishments.

Here's an example to illustrate how this works:

If you have two creditors seeking wage garnishment, and both have valid judgments against you, each creditor can potentially garnish up to 25% of your disposable earnings. However, when combined, the total amount garnished from all creditors cannot exceed 25% of your disposable income.

It's important to note that certain types of debt, such as child support and unpaid taxes, may have different garnishment rules. For example, child support can result in a higher percentage of your wages being garnished, and government entities like the IRS may have their own garnishment rules.