If a defendant does not pay a judgment in Michigan, the legal process does not automatically end. Instead, the responsibility shifts to the plaintiff, who becomes the judgment creditor, to actively pursue the collection of the owed funds.
When a defendant fails to comply with a court order to pay a judgment, the judgment creditor must initiate further legal steps to enforce the judgment and recover their money. If the defendant does not pay the judgment as ordered, the judgment creditor will have to collect their money through an execution against property or a garnishment.
Understanding Judgment Enforcement in Michigan
In Michigan, a judgment is a court order recognizing a debt. If the judgment debtor (the defendant who owes the money) does not voluntarily pay, the judgment creditor must take proactive measures to seize assets or income.
Key Collection Methods
The primary ways to collect an unpaid judgment in Michigan involve garnishment or execution against property. These methods require the judgment creditor to file additional paperwork with the court to legally compel the debtor or third parties (like banks or employers) to release funds or assets.
1. Garnishment
Garnishment is a legal process that allows a judgment creditor to collect money from the debtor's assets held by a third party.
- Wage Garnishment: This is one of the most common methods. The court can order an employer to withhold a portion of the judgment debtor's wages and pay it directly to the judgment creditor until the debt is satisfied. There are limits on how much of a person's wages can be garnished, typically up to 25% of disposable earnings or a set amount above the federal minimum wage, whichever is less.
- Bank Account Garnishment: A judgment creditor can seek a court order to freeze and seize funds from the debtor's bank accounts. Once a garnishment is issued, the bank is notified and must hold any non-exempt funds up to the judgment amount.
- Tax Refund Garnishment: In some cases, state tax refunds can be intercepted to pay off certain types of judgments, particularly those owed to the state or for specific debts like child support.
2. Execution Against Property
Execution involves seizing and selling the judgment debtor's assets to satisfy the debt. This process typically requires a Writ of Execution issued by the court.
- Personal Property: This can include non-exempt items like vehicles, boats, artwork, or valuable electronics. Law enforcement (e.g., a sheriff or court officer) may seize these items, which are then typically sold at auction, with the proceeds going to the judgment creditor.
- Real Property: If the judgment debtor owns real estate (e.g., a house, land), a lien can be placed on the property. While Michigan law has homestead exemptions that protect a certain value of a primary residence from creditors, the judgment can become a lien that must be paid if the property is sold or refinanced. In some cases, the property can be forced into a sheriff's sale, though this is less common for primary residences due to exemptions.
Steps to Initiate Collection
To begin the collection process, the judgment creditor typically needs to:
- Identify Assets: Locate where the debtor works, banks, or owns property. This may involve formal discovery methods, such as an Order to Appear for Examination of Assets (sometimes called a Debtor's Exam), where the debtor is legally required to answer questions about their finances under oath.
- File Proper Paperwork: Submit the necessary forms and fees to the court to request a Writ of Garnishment, Writ of Execution, or an Order for Examination of Assets.
- Serve Documents: Ensure the debtor and any third parties (like banks or employers) are properly served with the legal documents.
Important Considerations for Collection
| Aspect | Description |
|---|---|
| Judgment Duration | A judgment in Michigan is valid for 10 years and can typically be renewed for additional 10-year periods, giving the creditor a long time to pursue collection. |
| Interest Accrual | Judgments accrue interest from the date the judgment is entered until it is paid in full. The interest rate is set by Michigan statute. |
| Exemptions | Not all of a debtor's assets or income can be seized. Michigan law provides various exemptions to protect certain property (e.g., a portion of wages, homestead equity, certain personal belongings) from collection. |
| Costs of Collection | The judgment creditor may incur additional court fees, attorney fees, and costs for the collection process. In some cases, these costs can be added to the amount the debtor owes. |
| Liens | Filing a judgment with the register of deeds in the county where the debtor owns property can create a judgment lien, which acts as a claim against the property. |
Navigating judgment collection can be complex. Judgment creditors often seek legal counsel to ensure they follow proper procedures and maximize their chances of recovery. For debtors, understanding their rights, including exemptions, is crucial when faced with collection actions.
