Credit Cards and Garnishment

• Under Michigan law, your credit card company can only garnish your wages after it sues you for the debt and receives a judgment in its favor. After the company receives the judgment, it can apply for a writ of garnishment to satisfy the terms of the judgment. A writ of garnishment allows the creditor to order a third party who owes you money -- namely your employer -- to turn over that money to the creditor.
  
  

Exempt Wages

• Salary wages are subject to garnishment under Michigan law, but some forms of income are off limits to your credit card company. Government benefits, such as Social Security, insurance, annuities and pensions, are all exempt from garnishment by credit card companies. Note, however, that these sources of income may be garnished for other types of debt, such as back taxes and child support.
  
  Regarding your salary wages, up to 25 percent of your "disposable income" can be garnished. Disposable income doesn't mean what you have left after you pay your bills. Rather, in the case of garnishments, disposable income refers to what you take home after payroll deductions. Accordingly, up to 90 percent of your wages may be considered disposable income and subject to garnishment.
  
  

Statue of Limitations

• Your credit card company can only pursue you for your debt for a limited time. According to Michigan law, the statute of limitations on credit card debt is six years. Your creditor must sue you for the unpaid debt within that time frame, or it cannot get a judgment against you and garnish your wages.
  
  However, if the creditor gets a judgment against you, it has 10 years to apply for a writ of garnishment. This provision allows your credit card company to wait until your income increases to pursue you for repayment. After 10 years, your creditor can apply to extend the judgment, giving it more time to file a writ.
  
  

Getting Help

• The best way to avoid a garnishment is to work with your credit card company before things get out of hand. Don't ignore your unpaid debt and payment requests. Contact your creditor to work out a payment plan. If you are sued over your debt, don't ignore your court summons. If you don't appear in court, your credit card company may automatically win the case. If you receive a summons, you may want to contact an attorney who specializes in debt cases for advice. Contact the Michigan Bar Association for help finding an appropriate lawyer.
  
  If a garnishment has already been granted, contact a lawyer for help filing a Claim of Exemption form. Exemption forms ask questions about your monthly income and expenses as well as why you believe the garnishment should be set aside or the garnishment amount should be reduced. After you file the form, the court sets a trial date to reconsider your case. At the hearing, the court may modify the writ of garnishment.