A person who is drowning in debt may make the mistake of ignoring his or her creditors. A common misconception is that ignoring a debt will make it go away or help it become more manageable. In reality, pretending a debt does not exist only makes creditors more aggressive, and when it becomes clear that you will not pay them voluntarily, they will begin exploring other methods to extract money from you. One way a creditor may obtain money owed is by getting a

What is a Garnishment?

Garnishment refers to garnishing, or collecting money on behalf of a plaintiff, from the funds of another person. Typically the plaintiff is someone who is owed money by a defendant, and garnishments can be used by major companies, law firms, or even average individuals. The garnishment allows your creditors to obtain the money you owe them through means outside of the collection actions with which most are familiar.

The Garnishment Process and How it Affects You

Once you have fallen significantly behind in payments for a debt, your creditor may take you to court to try and collect their funds.  This method is often used when the debt is unsecured since they have no property such as a vehicle or home to repossess. If the court agrees that the defendant (debtor) needs to pay the debt, then the creditor receives a judgement.  

After the judgement is received a creditor may request a post-judgment garnishment order. The process and secondary order affect you by allowing your creditor to send the garnishment order directly to any person who holds your money or property. As soon as your creditor has a garnishment order, they can contact your employer or bank to have money withheld from your paycheck or withdrawn from your bank accounts.

How to Stop a Garnishment

Finding out that you have a garnishment can be financially devastating, but it is not the end of the world. It is possible to object to the garnishment in writing and make outside arrangements to pay the debt, allowing the garnishment order to be canceled. However, this method is time-sensitive and may not always work. If a creditor has failed to get you to honor other arrangements or the court itself does not agree with the plan, then the garnishment order may remain active. Alternatively, filing for bankruptcy stops all collection activities including garnishments under the automatic stay giving you an opportunity to find a way to recover financially.  

Contact an Attorney

If you have been taken to court or fear that you may have your bank account or income source garnished, then it is important to reach out to an attorney as soon as possible. Timely advice may help you avoid being forced to file for bankruptcy and could save you significant financial hardship. The garnishment attorneys at Resnick Law have experience helping people in situations just like yours. We work with you to make sure that the best choices are made and are available to answer any questions that you may have. Call us today at 248-642-5400 to schedule a free consultation so that we can begin providing you with the legal assistance that you need.

(image courtesy of Pepi Stojanovski)

There are many consumers who look forward to getting substantial tax refunds each year. These funds may be used as savings, to pay for various expenses, or to pay off existing debt. Consumers who have made plans to spend their tax refunds may be concerned about the ability of existing creditors to garnish those tax refunds.

Generally, private creditors – creditors who are not government creditors – cannot garnish a person’s federal tax refund. Federal tax refund garnishment is usually restricted to garnishment by government agencies that are owed money by the taxpayer. In Michigan, however, a private creditor can have a state tax refund garnished by first petitioning a court for a judgement.

With a judgement in hand, the private creditor can seek a writ of garnishment from the Michigan Department of Treasury to intercept a debtor’s tax refund. The writ can apply to garnish or intercept a debtor’s refund once to settle a debt owed to the judgment creditor. There is a fee for garnishment, and the creditor can make one payment when filing for several garnishments.

When a creditor has initiated a garnishment with the Michigan Department of Treasury, the debtor who owes the debt, and the court that permitted the garnishment, are notified of the impending garnishment. If the debtor does not wish to have his or her tax refund intercepted, he can make arrangements to pay the debt in advance and avoid the garnishment.

The debtor may try to avoid losing the tax refund by negotiating with the creditor to set up a payment plan to pay off the debt gradually instead of all at once. Once the creditor has already received a final judgment on the debt, and has taken steps to start garnishment, the creditor may not be willing to negotiate with the debtor. If the debtor has not been successful in keeping to a payment plan in the past, he is not likely to keep up with a plan unless the debtor’s financial circumstances have changed. The creditor has to consider issues such as how much of a refund a particular debtor may receive in deciding whether or not to allow the debtor to pay off the debt in installments.

In addition to seeking to garnish a debtor’s tax refund, a creditor can seek garnishment of a person’s wages as well as lottery winnings. Creditors can also choose to sell a debt that is considered uncollectible to a collections agency or firm, often for pennies on the dollar. If the debtor has filed for bankruptcy before the creditor has been fully repaid, the creditor may still have an opportunity to collect on the debt if the debt is recorded and secured.

Contact an Experienced Creditor’s Attorney

For more information on how you can best collect a debt with minimal costs to your organization and how to deal with debtor bankruptcy, you need to consult an experienced creditor’s rights attorney. Contact us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan to schedule a consultation.

(image courtesy of Sharon McCutcheon)