Creditor’s Examination
A creditor's examination, sometimes called a debtor examination or deposition in aid of execution, is a legal procedure that occurs during the debt collection process. In Michigan, it is a court-ordered examination that requires a debtor to provide information under oath about their financial situation. The court may compel discovery of any property or things in action belonging to a judgment debtor, and of any property, money, or things in action due to the judgment debtor, or held in trust for the judgment debtor. The creditor's examination is typically conducted after a judgment has been entered against a debtor.
During a creditor's examination, the debtor is required to answer questions under oath about their finances, including their income, assets, and liabilities. The examination can be conducted in person or via video conference, and the debtor is required to provide accurate and complete answers. The creditor's examination is designed to help the creditor locate assets that can be used to satisfy the debt.
The creditor's examination is an important tool for creditors in the debt collection process. It allows them to gather information about the debtor's financial situation and locate assets that can be used to satisfy the debt. If the debtor fails to appear for the creditor's examination or provides incomplete or inaccurate information, the creditor may be able to obtain a contempt order or other legal remedies.
Overall, the creditor's examination is a powerful tool for creditors in the debt collection process. If you are a creditor seeking to recover unpaid debts in Michigan, consider working with our Michigan collections law firm to explore your options for obtaining a creditor's examination.
Michigan legal authority: MCL 600.1455, 600.1701, 600.6110, 600.6119, MCR 2.506
Relevant SCAO Forms: MC 11
COURT ORDERED PROHIBITION ON TRANSFER OF PROPERTY
A judgment creditor may request a restraining provision from the court requiring that a judgment debtor abide by a prohibition against transferring, interfering with, or disposing of property. Third-parties served with a copy of the court’s prohibition, who violate the restraining provision, are subject to punishment by the court for contempt, and are liable to the judgment creditor for any damages sustained.
Asking a court to enter an order prohibiting a judgment debtor from transferring property can be a valuable tool for creditors in the debt collection process. Here are some benefits of obtaining such an order:
Preserves assets for collection: If a judgment debtor is allowed to transfer their property, it can become more difficult for a creditor to collect on the debt. By obtaining an order prohibiting the transfer of property, the creditor can ensure that the debtor's assets remain available for collection.
Prevents fraudulent transfers: By obtaining an order prohibiting a judgment debtor from transferring property, creditors can prevent the debtor from transferring assets in an attempt to avoid paying the debt. This can help to prevent fraudulent activity and ensure that the debtor's assets remain available for collection.
Increases likelihood of recovery: If a creditor is unable to collect on a debt, they may have to write off the debt as uncollectible. By obtaining an order prohibiting the transfer of property, the creditor increases the likelihood of recovering the debt, which can be crucial for their financial stability.
Provides legal recourse: If a debtor violates an order prohibiting the transfer of property, the creditor may have legal recourse, including the ability to seek a contempt order from the court. This can help to deter debtors from attempting to transfer assets and ensure that creditors have the legal tools necessary to protect their interests.
Obtaining an order prohibiting a judgment debtor from transferring property can be a powerful tool for creditors in the debt collection process. If you are a creditor seeking to recover unpaid debts, consider working with our Michigan collections law firm to explore your options for obtaining such an order.
Michigan legal authority: MCL 600.6104(2), MCL 600.6116, MCL 600.6119
Relevant SCAO Forms: MC 11
ORDER TO SEIZE PROPERTY
An order to seize property directs a court officer to seize and sell, according to law, any of the personal property (as determined by the officer) of the judgment debtor(s) that is not exempt from seizure, as will be sufficient to satisfy the judgment creditor’s demand, costs, and any statutory fees and expenses. Personal property may include, but is not limited to, motor vehicles or money, wherever located. This type of order is typically obtained after a judgment has been entered against the debtor.
If sufficient personal property of the judgment debtor cannot be found within the court officer’s jurisdiction, the court officer may seize and sell any of the real property of judgment debtor(s) not exempt from seizure, as will be sufficient to satisfy judgment creditor’s demand, costs, and any statutory fees and expenses.
The order to seize personal property is useful for several reasons:
It can help to satisfy the debt: By seizing and selling the debtor's personal property, the creditor can use the proceeds to satisfy the debt. This can be an effective way to recover unpaid debts.
It can provide leverage: The threat of seizure can be a powerful tool for creditors. The debtor may be more willing to negotiate a settlement or payment plan once they realize that their personal property is at risk.
It can deter future delinquency: The prospect of having their personal property seized can be a strong incentive for debtors to make timely payments in the future. This can help to prevent future delinquency and improve the creditor's financial stability.
It is a legal remedy: The order to seize personal property is a legal remedy that allows creditors to enforce their rights under the law. This can help to ensure that creditors are treated fairly and that debtors are held accountable for their obligations.
The order to seize personal property is a valuable tool for creditors in the debt collection process. If you are a creditor seeking to recover unpaid debts in Michigan, work with our collections law firm to explore your options for obtaining such an order.
Michigan legal authority: MCL 600.2920, MCL 600.6002, MCR 3.106
Relevant SCAO Forms: MC 19
WRIT FOR GARNISHMENT (PERIODIC AND NON-PERIODIC)
A judgment creditor may take money from a source that pays the judgment debtor on a regular basis through a periodic garnishment. These payments could be paychecks, rent payments, land contract payments, or other contract payments. A non-periodic garnishment is a garnishment of property or obligations made on a nonperiodic basis, including but not limited to bank accounts, property, money, goods, chattels, credits, and negotiable instruments or effects.
Through Michigan’s garnishment process, established by statute and court rule, a portion of an individual's paycheck or bank account is withheld by court writ to satisfy a debt owed to a creditor. This post-judgment remedy is also applicable to businesses, where writs for garnishment can attach to income streams such as accounts receivables and financial accounts. This can be a scary and stressful experience for many people and businesses, as it can significantly impact their finances and ability to make ends meet.
The amount garnished can vary depending on the type of debt, state laws, and other factors. In some cases, the garnishment can be up to 25% or more of the individual's net pay.
It is important to note that individuals have legal rights and options when facing garnishment, including the ability to challenge the garnishment or negotiate a settlement with the creditor. If you are facing garnishment, consider working with a collections law firm to understand your rights and explore your options for resolving the debt.
Michigan legal authority: MCL 600.4011 et seq., MCR 3.101
Relevant SCAO Forms: MC 12, MC 13
NOTICE OF JUDGMENT LIEN
A judgment creditor file a notice of judgment lien with the court that issued the judgment. Following certification by the court, the judgment lien is recorded in the land title records of the local register of deeds. The judgment lien remains effective for five years (subject to the life of the judgment), may be renewed, and must be paid by the judgment debtor upon conveyance, sale or refinance of the property.
Michigan legal authority: MCL 600.2805
Relevant SCAO Forms: MC 94
GARNISHMENT OF STATE INCOME TAX REFUND AND/OR CREDIT
The Michigan Department of Treasury withholds income tax refunds or credits for payment of certain debts, such as garnishments. When the State receives a garnishment writ, it is matched with income tax return information and the refund is held for possible offset.
The process is similar to wage garnishment, but instead of an employer withholding a portion of an employee's paycheck, the State of Michigan withholds a portion of the individual's tax refund. While this type of garnishment is typically used for debts owed to government agencies, such as unpaid taxes, child support or student loans, other creditors can also avail themselves of this post-judgment remedy. In some cases, the entire refund may be garnished, while in other cases only a portion may be withheld.
State income tax garnishment can be an effective tool for creditors to recover unpaid debts in Michigan. If you are a creditor seeking to collect on a debt owed to a state agency, consider exploring your options for garnishing the debtor's state inocme tax refund.
Michigan legal authority: MCL 600.4061, MCL 600.4061a
Relevant SCAO Forms: MC 52
CHARGING ORDER
A judgment creditor of a member of a limited liability company may apply to the court and the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest. If a limited liability company is served with a charging order and notified of the terms of that order, then to the extent described in the order, the member's judgment creditor described in the order is entitled to receive only any distribution or distributions to which the judgment creditor is entitled with respect to the member's membership interest.
It can help to satisfy the debt: By placing a lien on the debtor's interest in a partnership or LLC, the creditor can receive a portion of the debtor's distributions from the entity. This can be an effective way to recover unpaid debts.
It can provide leverage: The threat of a charging order can be a powerful tool for creditors. The debtor may be more willing to negotiate a settlement or payment plan once they realize that their interest in the partnership or LLC is at risk.
It can deter future delinquency: The prospect of having a charging order placed on their interest in a partnership or LLC can be a strong incentive for debtors to make timely payments in the future. This can help to prevent future delinquency and improve the creditor's financial stability.
It is a legal remedy: The charging order is a legal remedy that allows creditors to enforce their rights under the law. This can help to ensure that creditors are treated fairly and that debtors are held accountable for their obligations.
The charging order is a valuable tool for creditors in the debt collection process. If you are a creditor seeking to recover unpaid debts in Michigan, contact our collections law firm to explore your options for obtaining a charging order in your Michigan collections case.
MichMichigan legal authority: MCL 450.4507
Relevant SCAO Forms: N/A
RECEIVERSHIP
After judgment has entered, a court may appoint a receiver for purposes of carrying the judgment into effect or to preserve nonexempt property when an execution has been returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment.
Michigan legal authority: MCL 554.1016, MCL 600.6104(4), MCR 2.622
Relevant SCAO Forms: MC 445
DOMESTICATION OF FOREIGN JUDGMENT IN MICHIGAN
Domesticating a judgment in Michigan refers to the process of registering a judgment that was obtained in another state or country, in the state of Michigan. A judgment creditor may petition a Michigan court for the purposes of domesticating a properly authenticated foreign judgment. This process is necessary in order to enforce the judgment in Michigan.
Once a judgment has been domesticated in Michigan, it has the same legal effect as a judgment that was originally obtained in Michigan. This means that the judgment creditor can take steps to enforce the judgment, such as garnishing wages, seizing property, or placing a lien on real estate.
The process of domesticating a judgment in Michigan typically involves filing the foreign judgment with the Michigan court system and obtaining a court order recognizing the foreign judgment as valid and enforceable in Michigan. The judgment creditor must provide certain documentation, such as a certified copy of the original judgment, as part of the domestication process.
It is important to note that the process of domesticating a judgment in Michigan can be complex and may require the assistance of an experienced collections law firm. If you are a judgment creditor seeking to enforce a foreign judgment in Michigan, contact our collections law firm to explore your options for domesticating the judgment and enforcing your rights under the law.
Michigan legal authority: MCL 691.1171 et seq.
Relevant SCAO Forms: MC 62
PROPERTY AND INCOME EXEMPT FROM GARNISHMENT
The following are examples of some types of income that are exempt from garnishment and the citations where each type may be found in the law.
Individual Retirement Account (IRA) - [MCL 600.6023(1)(k)]
Social Security Benefits - [42 USC, Section 407]
Supplemental Security Income Benefits (SSI) - [42 USC, Section 1383(d)]
Aid to Families with Dependent Children (AFDC) - [MCL 400.63]
General Assistance Benefits (GA) - [MCL 400.63]
Unemployment Compensation Benefits - [MCL 421.30]
Veterans Assistance Benefits - [38 USC, Section 3101]
Workers’ Compensation Benefits - [MCL 418.821]
The first $500.00 on deposit in a savings and loan savings account - [MCL 491.628]
Cash value or proceeds of life insurance or annuity, payable to the spouse or children of the insured - [MCL 500.2207(1)]
Income benefits under the Michigan Civil Service Act - [MCL 38.40]
Income benefits under the Michigan Retirement Act - [MCL 421.30]
U.S. Civil Service Retirement Benefits - [5 USC, Section 8346]
Please note that this is not intended as a complete list. Consumers should always contact a lawyer or legal aid agency for legal advice.