SB 1137

SENATE BILL NO. 1137
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
by amending sections 4011, 4012, 4015, 4031, 4061a,
6023, 6027, 6059, and 6104 (MCL 600.4011, 600.4012, 600.4015, 600.4031,
600.4061a, 600.6023, 600.6027, 600.6059, and 600.6104), section 4011 as amended
and section 4061a as added by 1994 PA 346, section 4012 as amended by 2015 PA
14, and section 6023 as amended by 2012 PA 553, and by adding sections 4001a,
4032, 4033, 6001a, 6023b, 6023c, 6023d, 6023e, 6023f, and 6023g.
the people of the state of michigan enact:
Sec. 4001a. As
used in this chapter:
(a) "Consumer" means an individual.
(b) "Creditor" means a person to whom a debt is owed and
includes a judgment creditor and any other person that obtains a garnishment or
execution on a debt. As used in this subdivision, "execution" means
that term as defined in section 6001a.
(c) "Earnings" means compensation paid or payable for personal
services, whether denominated as wages, salary, commission, bonus, payment for
skilled, personal, or professional services, or otherwise, whether earned as an
employee or as an independent contractor, and includes spousal support.
(d) "Exempt" means that term as defined in section 6001a.
(e) "Garnishable earnings" means that part of the earnings of
any individual remaining after the deduction from the earnings of any amounts
required by law to be withheld, such as taxes, Social Security, or alternative
pension and Medicare withholdings, and after further deduction of up to 15% of
the remainder of the earnings for amounts withheld for contributions for health
insurance or a medical expense account.
(f) "Garnishment" means a legal or equitable procedure through
which the earnings, property, or money of an individual are required to be
withheld by another person for payment of any debt to a creditor.
Sec. 4011. (1) Subject to sections 4061 and 4061a, and the conditions in the limitations in this chapter, including subsections
(2) to (10), the a court
has power may by
garnishment to apply the following property
or obligation, or both, to the satisfaction of a claim evidenced by contract,
judgment of this state, or foreign judgment, whether or not the this state has
jurisdiction over the person against whom the claim is asserted:
(a) Personal
property belonging to the person against whom the claim is asserted but which that is in
the possession or control of a third person if the third person is subject to
the judicial jurisdiction of the this state and the personal property to be applied is
within the boundaries of this state.
(b) An obligation
owed to the person against whom the claim is asserted if the obligor is subject
to the judicial jurisdiction of the this state.
(2) Except as
provided in sections 4061 and 4061a, the court may exercise the jurisdiction
granted in this section only in accordance with the Michigan court rules.
Except as otherwise provided by sections 4061 and 4061a and the Michigan court
rules, the this state
and each governmental unit within the this state, including,
but not limited to, a public, municipal,
quasi-municipal, or governmental corporation, unincorporated board, public
body, or political subdivision, may be proceeded against as a garnishee in the
same manner and with the same effect as a proceeding against an individual garnishee.
(3) A writ of
garnishment may be issued before judgment only as provided in this subsection. Upon
ex parte application showing that the person against whom the claim is asserted
is not subject to the judicial jurisdiction of the this state or, after diligent effort, cannot be
served with process as required to subject the person to the judicial
jurisdiction of the this state, a copy of the writ of garnishment shall must be
served upon on the
person against whom the claim is made in the same manner as provided by the
Michigan court rules for service of process in other civil actions in which
personal jurisdiction over the defendant is not required. Upon entry of
judgment in the principal action, the obligation or property garnished shall must be
applied to the satisfaction of the judgment.
(4) A person shall not commence a garnishment proceeding shall not be commenced against the this state or
a governmental unit of the this state, including,
but not limited to, a public, municipal,
quasi-municipal, or governmental corporation, unincorporated board, public
body, or political subdivision, until after the plaintiff's claim has been
reduced to judgment.
(5) A person shall not commence a garnishment proceeding shall not be commenced against a another person
for money owing to a defendant on account because of labor performed by the defendant until
after the plaintiff's claim has been reduced to judgment.
(6) A sheriff or
other public officer is not subject to garnishment for money or things received
or collected by him or her pursuant to the sheriff or other public officer in carrying out an
execution or other legal process in the favor of the defendant or because of
any money in his or her the sheriff's or other public officer's hands for
which he or she the
sheriff or other public officer is accountable merely as a public
officer to the defendant.
(7) A person shall not commence a garnishment proceeding shall not be commenced if the commencement of such
a the proceeding is forbidden by a
statute of this state.
(8) Except as
otherwise provided in sections 4012 and 4061, a plaintiff shall pay a fee of
$1.00 to the garnishee at the time the garnishee is served with a writ of
garnishment.
(9) If the court or
garnishee possesses money or property pursuant to under a writ of garnishment after the court releases
the garnishee from liability under that the writ, the court shall convey or order the
conveyance of the money or property to any of the following, as the court
determines appropriate:
(a) The defendant's
attorney, if the defendant is represented by counsel in the garnishment
proceeding.
(b) The defendant,
if the defendant is not represented by counsel in the garnishment proceeding.
(c) The plaintiff.
(10) A writ of
garnishment is not effective if both of the following conditions are met:
(a) The plaintiff
fails to provide the garnishee with information sufficient for the garnishee to
identify the defendant.
(b) The garnishee
provides the court with written notice of the insufficiency described in
subdivision (a).
Sec. 4012. (1) A garnishment of periodic
payments remains in effect until the balance of the judgment is satisfied.
(2) A garnishee is
not liable for a garnishment of periodic payments under subsection (1) to the
extent that the garnishee is required to satisfy another garnishment against
the same defendant having that has a higher priority or having that has the
same priority but is received at an earlier
date. For purposes of this subsection, garnishments,
other than a garnishment described in subdivision (a),
have priority in the order in which they are received. Both of the
following have priority over a garnishment, regardless of the order in which
they are received:
(a) An order of income withholding a
court, including, but not limited to, a garnishment, to enforce the payment of
support, as that term is defined in section 2 of the support and
parenting time enforcement act, 1982 PA 295, MCL 552.602.
(b) A levy of this
state or a governmental unit of this state to satisfy a tax liability.
(3) If a
garnishment of periodic payments is suspended pursuant
to by an order under sections 6201 to
6251 and the order is subsequently set aside, the garnishment retains its
priority.
(4) A garnishment
of periodic payments or a notice of failure is not valid or enforceable unless
the garnishment is served on the garnishee in accordance with the Michigan
court rules.
(5) While a
garnishment of periodic payments is in effect, the plaintiff shall do both of
the following:
(a) At least once
every 6 months after the plaintiff receives the first payment under the
garnishment, provide to the garnishee and defendant a statement setting forth
the balance remaining on the judgment, including interest and costs. A failure
to send a timely statement under this subdivision does not affect the
garnishment or any obligation of the garnishee under the garnishment.
(b) Within Not later than 21
days after the balance of the judgment has been paid in full, including all
interest and costs, provide to the garnishee and defendant a release of
garnishment.
(6) A plaintiff
shall not request that a default be entered against a garnishee under a
garnishment of periodic payments unless both of the following apply:
(a) If the
garnishee fails to file a disclosure within 14 days after service of the
garnishment or fails to perform any other required act, the plaintiff has
served on the garnishee a notice of failure setting forth the required act or
acts that the garnishee has failed to perform.
(b) The garnishee
has failed, within 28 days after the date of service of the notice of failure
under subdivision (a), to cure the identified failure by mailing to the
plaintiff and defendant a disclosure certifying that the garnishee will
immediately begin withholding any available funds
pursuant to money in accordance with the
garnishment as provided by statute or court rule, or has commenced performing
any other required act.
(7) The plaintiff
shall attach to a request for entry of a default as allowed under subsection
(6) proof of serving the notice of failure. The plaintiff shall send a copy of
the request for entry of a default by certified mail to the garnishee at the
garnishee's principal place of business or registered agent.
(8) After entry of
a default under subsection (6) and before entry of a default judgment, the
garnishee may cure the identified failure by mailing to the court, plaintiff,
and defendant a disclosure certifying that the garnishee will immediately begin
withholding any available funds pursuant to money in accordance with the garnishment as provided
by statute or court rule or that it the garnishee has commenced performing any other
required act.
(9) After a default
has been entered under subsection (6), the plaintiff may file with the court a
request for default judgment for an amount that does not exceed the full amount
of the unpaid judgment, interest, and costs, as stated in the request and garnishment.
The plaintiff shall send a copy of the request for default judgment by
certified mail to the garnishee at the garnishee's principal place of business
or resident agent.
(10) On Upon motion of
the garnishee filed within not later than 21 days after entry of a default
judgment under subsection (9), the court shall do 1 or more of the following,
as applicable:
(a) If the
garnishee certifies by affidavit that its the garnishee's failure to comply with the
garnishment was inadvertent or caused by an administrative error, mistake, or
other oversight and it the garnishee will immediately begin withholding any
available funds money
or immediately begin performing any other required act pursuant to in accordance
with the garnishment as provided by statute or court rule, reduce the
default judgment to not more than the amount that would have been withheld if
the garnishment had been in effect for 56 days.
(b) If any of the
following circumstances exist, set aside the default judgment:
(i) The garnishee was not liable to the
defendant for any periodic payments after service of the garnishment.
(ii) The garnishment, notice of failure,
request for entry of a default, or request for default judgment was not
properly served or sent as required by this section.
(iii) The notice of failure was materially
inaccurate or incomplete.
(11) A garnishee
may recover an amount for which the garnishee is liable because of the entry of
a default judgment under subsection (9) or (10) from future periodic payments
to the defendant as provided in section 7 of 1978 PA 390, MCL 408.477.
(12) Except as
otherwise provided by statute, a plaintiff shall pay a fee of $35.00 to the
garnishee at the time a garnishment of periodic payments is served on the
garnishee.
(13) This section
does not apply to any of the following:
(a) An order of
income withholding as that term is defined in section 2 of the support and
parenting time enforcement act, 1982 PA 295, MCL 552.602.
(b) A levy for tax
liability.
(c) A levy under
section 15(m) of the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL
421.15.
(14) As used in
this section and section 8410a, "periodic payments" means wages,
salary, commissions, and other earnings, land contract payments, rent, and
other periodic debt or contract payments that are or become payable during the
effective period of the garnishment. Periodic payments do not mean any of the
following:
(a) Payments by a
financial institution of interest on a deposit account.
(b) Charges made by
a financial institution automatically against an account that are applied to a
debt under an automatic payment authorization executed by the account owner.
(c) Payments made
by a financial institution to honor a check or draft or to comply with an
account holder's order of withdrawal of funds from an account.
(d) Interest earned
on a certificate of deposit that is paid into a deposit account.
Sec. 4015. (1) A
garnishee defendant shall not use the fact that the principal defendant has had
1 or more actions brought against him the principal defendant under the provisions of this chapter or section 8306 as
a cause of reason
to discipline the principal defendant or
discharge of the principal defendant from
employment or from an independent contract, or as a
reason to not hire or contract with the principal defendant.
(2) A Upon motion filed in
the action or in a separate civil action, a court shall enter a judgment
against a garnishee defendant who violates the
provisions of this section shall be required
that requires the garnishee defendant to
reinstate do all of
the following:
(a) Reinstate the
principal defendant to employment. and reimburse
(b) Reimburse all
compensation, including
wages, earnings, and employment benefits, lost by because of the
discipline, or discharge, or failure to hire or contract. The principal defendant may enforce his rights under this
section by appropriate civil action.
(c) Pay reasonable actual attorney fees and costs.
Sec. 4031. (1) The provisions of the this act and any
other statutes relating that relate to exemptions from execution, and the
manner of levying upon on property belonging that belongs to a class or species in which
exemptions are allowed by law, allowed, shall be
applicable apply to the application of
property and obligations to claims by attachment and garnishment.
(2) In any a garnishment
proceeding where in
which the indebtedness of the garnishee to the principal defendant is
money owed to the principal defendant on account because of
(a) the
sale to the garnishee of milk or cream, or both, produced on the farm or farms of the principal
defendant, the garnishee's liability to the plaintiff is limited to 40% of such the money. ;
(b) personal labor performed by the principal defendant or
his family, the garnishee's liability to the plaintiff is limited by the
exemptions allowed under section 7511.
Sec. 4032. (1)
Subject to section 4061a, the money that a debtor receives as payment of any of
the following is exempt from garnishment:
(a) Any means-tested public assistance benefits.
(b) Unemployment compensation benefits.
(c) Federal earned income tax credit under 26 USC 32.
(d) State tax credit under section 272 of the income tax act of 1967,
1967 PA 281, MCL 206.272, or a similar credit under a program of this state or
a local unit of government providing an earned income tax credit.
(e) Disability benefits.
(f) Worker's disability compensation benefits.
(2) A debtor's garnishable earnings are exempt and not subject to
garnishment, except that whichever of the following amounts is smaller may be
garnished:
(a) The debtor's garnishable earnings for the week that are more than 35
times whichever of the following is in effect at the time and is greater:
(i) The federal
minimum hourly wage prescribed by 29 USC 206(a)(1).
(ii) The state
minimum hourly wage applicable to the debtor's earnings under the improved
workforce opportunity wage act, 2018 PA 337, MCL 408.931 to 408.945.
(b) Fifteen percent of the debtor's garnishable earnings for the week.
(3) In calculating the amounts that are garnishable under subsection
(2), if the debtor's pay period is longer than a week, the amounts that are not
subject to garnishment must be adjusted pro rata.
(4) The amount of a debtor's garnishable earnings that can be garnished
for the support of a person is subject to the laws of this state governing
child support and spousal support.
(5) If more than 1 garnishment is served on a garnishee with respect to
the same debtor, the garnishee is liable under the garnishments in the priority
in section 4012(2). If a garnishment with greater priority consumes the
garnishable earnings that are available for garnishment under this section, no
part of the debtor's garnishable earnings may be garnished under the
garnishment with lower priority.
(6) The protections for earnings provided in this section apply to all
debtors whose physical place of employment is in this state, regardless of
whether the debtor's employer has offices or other places of business located
outside this state.
Sec. 4033. (1) A
financial institution that is holding money of the debtor in a deposit account
that is served with a garnishment shall calculate the amount of money deposited
into the account in the 90 days preceding service that, based on information provided
to the financial institution by the payor, was deposited from a source
described in section 4032(1). The financial institution shall include its
calculations in its disclosure.
(2) The amount of money held in a deposit account as calculated under
subsection (1) must not be paid or ordered to be paid to the plaintiff under
the garnishment.
(3) A financial institution shall not charge a fee to a debtor for any
actions taken by the financial institution in connection with a garnishment
served on the financial institution unless the fee is reasonable and is
disclosed by the financial institution as part of the institution's regular fee
schedule provided to the institution's customers or members.
(4) If a plaintiff serves writs of garnishment on multiple financial
institutions and receives disclosures from more than 1 financial institution
that the institutions are holding money of the judgment debtor's in 1 or more
deposit accounts, the plaintiff shall calculate the amount of money in each
account that is exempt in whole or in part under section 6023(1)(r), the
portion of an exempt amount that is exempt under subsection (2) and the
portion, if any, that is exempt in excess of the exemption under subsection
(2), and the amount in each account that is not exempt. The plaintiff shall
file copies of the calculations and the disclosures on which they are based
with the court and serve them on the judgment debtor and each of the financial
institutions that are holding money of the judgment debtor's.
(5) If a judgment debtor does not file an objection to the calculations
under subsection (4) with the court and serve the objections on a financial
institution within 7 days after receiving the calculations, the financial
institution may pay money held in a deposit account that is not exempt under
the calculations in accordance with the writ of garnishment.
Sec. 4061a. (1) The Subject to subsection
(6), the state treasurer shall intercept a state tax refund or credit
that is subject to a writ of garnishment served upon
on the state treasurer pursuant to under section
4061. Upon intercepting a state tax refund or credit pursuant to under a
writ of garnishment, the state treasurer shall do all of the following:
(a) Calculate the
amount available from the interception to satisfy all or part of the
garnishment, and within not later than 90 days after establishing other
liability for which the state tax refund or credit may be applied under section
30a of Act No. 122 of the Public Acts of 1941,
being section 1941 PA 122, MCL 205.30a, of the Michigan
Compiled Laws, do both of the following:
(i) File with the court a verified
disclosure that identifies the intercepted amount, less any setoff,
counterclaim, or other demand of the state against the defendant.
(ii) Serve upon on the plaintiff and defendant a copy of the
disclosure described in subparagraph (i).
(b) Unless notified
by the court that objections to the writ of garnishment have been filed,
deposit the amount available for the garnishment with either of the following pursuant to in accordance
with the terms of the writ not less than 28 days after filing the
disclosure pursuant to under subdivision (a):
(i) The clerk of the court.
(ii) The plaintiff's attorney of record in
the garnishment action , or, if the plaintiff is not represented by
counsel, the plaintiff or the plaintiff's designee.
(2) Objections to
the writ of garnishment of a tax refund shall must be filed with the court within not later than 14
days after the date of service of the disclosure on the defendant.
(3) If an
interception of a state tax refund or credit does not occur before October 31
of the year during which a writ of garnishment for a state tax refund or credit
is to be processed, both of the following apply:
(a) The state
treasurer is not required to provide to the defendant or file with the court a
disclosure.
(b) The state
treasurer is not required to provide to the plaintiff a disclosure unless the
plaintiff provides the state treasurer with a written request for a disclosure
between November 1 and December 31 of the tax year following the tax year for
which a the writ
of garnishment of a state tax refund or credit was filed.
(4) A disclosure
described in subsection (1) is not required to be made under oath.
(5) The This state's
liability to the plaintiff under a writ of garnishment issued under this
section is limited to the amount of the tax refund or credit due to the
defendant for the period the writ is in effect, less any
tax credit identified under subsection (6) and any setoff, counterclaim,
or other demand of the state against the defendant. As used in this subsection,
"state" includes the state treasurer.
(6) For a writ of garnishment served on the state treasurer after
January 1, 2027, if the writ of garnishment is for the satisfaction of a
judgment to recover a consumer debt, as that term is defined in section 6023g,
the state treasurer shall, to the extent practicable, not intercept under
subsection (1) any amount that is payment of a tax credit under section 272 of
the income tax act of 1967, 1967 PA 281, MCL 206.272. This subsection does not
affect any ability of this state to recover a setoff, a counterclaim, or other
demand from the tax credit identified under this subsection.
(7) (6) If
all or a portion of an intercepted state tax refund or credit is deposited with
the clerk of the court under subsection (1), the court shall convey the
deposited amount to the plaintiff's attorney of record in the garnishment
action or, if the plaintiff is not represented by counsel, to the plaintiff.
(8) (7) Michigan
court rules that do not conflict with this section or section 4061 govern a
garnishment in which the state is a garnishee.
(9) (8) As
used in this section, "state treasurer" includes an employee
designated by the state treasurer to act on his or
her the state treasurer's behalf.
Sec. 6001a. As
used in this chapter:
(a) "Dependent" means an individual who relies in whole or in
significant part on a debtor for support and maintenance.
(b) "Executing officer" means the officer appointed by the
court to implement an execution or order to seize property.
(c) "Execution" includes a levy or other disablement, freeze,
or seizure of property for debt collection or for restitution or another
equitable claim. Execution does not include self-help repossession of
collateral, the exercise of a right of setoff, or any means of collecting a tax
indebtedness available under 1941 PA 122, MCL 205.1 to 205.31. If there is a
legal distinction between setoff and offset, the term setoff includes an
offset.
(d) "Exempt" means, unless otherwise specified, not subject to
execution. Money that is exempt remains exempt when it is paid or transferred
to the debtor, the debtor's spouse, partner, beneficiary, or dependent or to an
account for the benefit of the debtor, the debtor's spouse, partner,
beneficiary, or dependent.
(e) "Garnishment" means that term as defined in section 4001a.
(f) "Homestead" means 1 of the following owned or being
purchased under an executory contract by the debtor that the debtor or a
dependent of the debtor occupies as the debtor's or the dependent's principal
residence:
(i) If the land is
located outside of a recorded plat, city, or village, a residence and
appurtenances and the land on which they are situated, not exceeding 40 acres.
(ii) If the land is
located within a recorded plat, city, or village, a residence and appurtenances
and the land on which they are situated, not exceeding 1 lot or parcel.
(iii) A residence
situated on land not owned by the debtor.
(iv) A condominium
unit.
(v) A unit in a
cooperative.
(vi) A motor home.
(vii) A boat or other
watercraft.
(g) "Necessary property" means property that is or provisions
that are reasonably essential to or needed for everyday living, including, but
not limited to, any special needs because of health or physical or mental
infirmity.
(h)
"Residence" includes real or personal property, including a share in
a residential cooperative, a beneficial interest in a trust applying to the
property, or a manufactured home, that is owned individually or in any form of
joint ownership by the debtor or the debtor's dependent, spouse, or domestic
partner.
(i)
"Resident" means a person living in this state temporarily or
permanently.
(j)
"Value" means current fair market value of accounts, goods, or
property less the amount of any liens or security interests in the accounts,
goods, or property, based on the price that would be paid, assuming a willing
buyer and a willing seller, for accounts, goods, or property of similar age and
condition. A debtor may testify as to the value of property the debtor owns.
Sec. 6023. (1) The following property of a
judgment debtor and the judgment debtor's dependents is exempt from levy and
sale under an execution:
(a) All family pictures, all arms
and accouterments required by law to be kept by any person, individual, all
wearing apparel other than furs of every person individual and
his or her the
individual's family, all household pets,
companion animals, and service animals, and provisions and fuel for
comfortable subsistence of each householder and his
or her the householder's family for 6
months.
(b) All The debtor's aggregate interest in household goods, furniture, utensils, books, and
appliances, not exceeding in value $1,000.00.$5,000.00 in value.
(c) Unless subdivision (d) applies, the debtor's interest in 1 motor
vehicle up to $5,000.00 in value. As used in this subdivision, "motor
vehicle" does not include any of the following:
(i) A watercraft,
as that term is defined in section 80301 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.80301.
(ii) A recreational
vehicle, as that term is defined in section 49a of the Michigan vehicle code,
1949 PA 300, MCL 257.49a.
(iii) An ORV, as that
term is defined in section 81101 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.81101. This subparagraph does not apply
unless the motor vehicle is used primarily for off-road travel.
(iv) A snowmobile,
as that term is defined in section 82101 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.82101.
(v) An aircraft, as
that term is defined in section 2 of the aeronautics code of the state of
Michigan, 1945 PA 327, MCL 259.2.
(vi) A vehicle that
is a registered historic vehicle under section 803a or 803p of the Michigan
vehicle code, 1949 PA 300, MCL 257.803a and 257.803p.
(d) If all of the following apply, the debtor's interest in 1 motor
vehicle as described in subdivision (c), up to $3,000.00 in value:
(i) The writ of
execution or order to seize property is issued for a judgment for debt owed to
a financial institution that was not assigned by another person to the
financial institution.
(ii) The financial
institution made an offer in writing to the judgment debtor to stipulate to an
order for payments in installments under chapter 62.
(iii) The debtor did
not respond to the offer within 14 days or rejected the offer.
(e) (c) A
seat, pew, or slip occupied by the judgment
debtor or the judgment debtor's family in a house or place of public worship,
and all cemeteries, cemetery lots, tombs, and
rights of burial while in use as
repositories of the dead of the judgment
debtor's family or kept for burial of the
judgment debtor.
(f) (d) To each householder, 10 sheep, 2 cows, 5 swine, 100 hens, 5
roosters, and a sufficient quantity of hay and grain, growing or otherwise, for
properly keeping the animals and poultry for 6 months,
or in the alternative and at the election of the debtor, the debtor's aggregate
interest, not to exceed $10,000.00 in value, in crops, farm animals, and feed
for the farm animals.
(g) (e) The
debtor's aggregate interest in tools, implements, materials, stock, apparatus, team, vehicle, motor vehicle,
farm equipment, farm vehicles, construction
equipment, construction vehicles, commercial vehicles, limousines, taxicabs, horses,
harness, harnesses,
or other things to enable a person the debtor to carry on the profession, trade, occupation, or business
in which the person
debtor is principally engaged, not
exceeding in value $1,000.00.$10,000.00 in value. As used
in this subdivision, "limousine" and "taxicab" mean those
terms as defined in section 2 of the limousine, taxicab, and transportation
network company act, 2016 PA 345, MCL 257.2102.
(h) The debtor's aggregate interest in computers, including, but not
limited to, mobile computing devices, mobile phones, and computer accessories,
not to exceed $5,000.00.
(i) All professionally prescribed health aids.
(j) (f) Any money or
other benefits paid, provided, or allowed to be paid , or provided , or allowed, by
any stock or mutual life or health or casualty insurance company, on account because of
the disability due
to resulting from the injury or sickness
of the insured person, whether the debt or liability of such the insured
person or beneficiary was incurred before or after the accrual of benefits
under the insurance policy or contract, except that the exemption under this
subdivision does not apply to actions to recover for necessities contracted for
after the accrual of the benefits.
(k) (g) A
homestead of not more than 40 acres of land and the
dwelling house and appurtenances on that homestead that is not included in a
recorded plat, city, or village, or, at the option of the owner, a quantity of
land that consists of not more than 1 lot that is within a recorded town plat,
city, or village, and the dwelling house and appurtenances on that land, owned
and occupied by any resident of this state, not exceeding in value $3,500.00.
This exemption applies to any house that is owned, occupied, and claimed as a
homestead by a person but that is on land not owned by the person. However,
this exemption does not apply to a
mortgage on the homestead that is lawfully obtained. A mortgage is not valid
for purposes of this subdivision without
the signature of a married judgment debtor's spouse unless either of the
following occurs:
(i) The mortgage is given to secure the
payment of the purchase money or a portion of the purchase money.
(ii) The mortgage is recorded in the office
of the register of deeds of the county in which the property is located, for a
period of 25 years, and no notice of a claim of invalidity is filed in that
office during the 25 years following the recording of the mortgage.not exceeding $125,000.00 in value or, if the debtor or
a dependent of the debtor is 65 years of age or older or disabled, not
exceeding $200,000.00 in value. However, if the homestead is a mobile home in a
mobile home park, as those terms are defined in section 2 of the mobile home
commission act, 1987 PA 96, MCL 125.2302, the exemption under this subdivision
is 50% of the fair market value if all of the following conditions apply:
(i) A court
has entered a judgment or order under chapter 57 or 57a restoring possession of
the premises to the mobile home park owner.
(ii) The
mobile home has been continuously unoccupied for at least 90 days after entry
of the judgment or order described in subparagraph (i).
(iii) An
indebtedness that is related to a lease agreement or terms of the tenancy
between the mobile home park owner and the mobile home owner is delinquent, and
an order to seize property or a writ of execution or eviction was issued
because of the indebtedness.
(iv) The
mobile home park owner has a license to operate the mobile home park under
section 16 of the mobile home commission act, 1987 PA 96, MCL 125.2316.
(l) (h) An equity of redemption as described in
section 6060.
(m) (i) The
homestead of a family, after the death of the owner of the homestead, from the
payment of his or her the owner's debts in all cases during the minority of
his or her the
owner's children.
(n) (j) An
individual retirement account or individual retirement annuity as defined in
section 408 or 408a of the internal revenue code of 1986, 26 USC 408 and 408a,
and the payments or distributions from the account or annuity. This exemption
applies to the operation of the federal bankruptcy code as permitted by section
522(b)(2) of the bankruptcy code, 11 USC 522. This exemption does not apply to
any amounts contributed to the individual retirement account or individual
retirement annuity if the contribution occurs within
not more than 120 days before the debtor
files for bankruptcy. This exemption does not apply to an individual retirement
account or individual retirement annuity to the extent that any of the
following occur:
(i) The individual retirement account or
individual retirement annuity is subject to an order of a court pursuant to under a
judgment of divorce or separate maintenance.
(ii) The individual retirement account or
individual retirement annuity is subject to an order of a court concerning
child support.
(iii) Contributions to the individual
retirement account or premiums on the individual retirement annuity, including
the earnings or benefits from those contributions or premiums, exceed, in the
tax year made or paid, the deductible amount allowed under section 408 of the
internal revenue code of 1986, 26 USC 408. This limitation on contributions
does not apply to a rollover of a pension, profit-sharing, stock bonus, or
other plan that is qualified under section 401 of the internal revenue code of
1986, 26 USC 401, or an annuity contract under section 403(b) of the internal
revenue code of 1986, 26 USC 403.
(o) (k) The
right or interest of a person in a pension, profit-sharing, stock bonus, or
other plan that is qualified under section 401 of the internal revenue code of
1986, 26 USC 401, or an annuity contract under section 403(b) of the internal
revenue code of 1986, 26 USC 403, if the plan or annuity is subject to the
employee retirement income security act of 1974, Public Law 93-406, 88 Stat . 829. This
exemption applies to the operation of the federal bankruptcy code, as permitted
by section 522(b)(2) of the bankruptcy code, 11 USC 522. This exemption does
not apply to any amount contributed to a pension, profit-sharing, stock bonus,
or other qualified plan or a 403(b) annuity if the contribution occurs within not more than 120
days before the debtor files for bankruptcy. This exemption does not apply to
the right or interest of a person in a pension, profit-sharing, stock bonus, or
other qualified plan or a 403(b) annuity to the extent that the right or
interest in the plan or annuity is subject to either of the following:
(i) An order of a court pursuant to under a
judgment of divorce or separate maintenance.
(ii) An order of a court concerning child
support.
(p) (l) Any interest in the following:
(i) A trust, fund, or advance tuition
payment contract established under the Michigan education trust act, 1986 PA
316, MCL 390.1421 to 390.1442.
(ii) An account established under the
Michigan education savings program act, 2000 PA 161, MCL 390.1471 to 390.1486.
(iii) An account in a qualified tuition
program or educational savings trust under section 529 or 530 of the internal
revenue code of 1986, 26 USC 529 and 530.
(iv) An account established under the
Michigan achieving a better life experience (ABLE) program act, 2015 PA 160,
MCL 206.981 to 206.997.
(q) Any money paid or to be paid because the debtor or a dependent of
the debtor was a crime victim.
(r) Money held in 1 or more deposit accounts with 1 or more financial
institutions, not to exceed in total whichever of the following is greater:
(i) $800.00.
(ii) The amount in the account, or amounts in
the accounts, calculated as exempt under section 4033(1).
(2) The exemptions
provided in this section do not extend to any mortgage
of, lien on, setoff,
or security interest in the exempt property that is excluded from
exemption by law, or that is consensually given or
lawfully obtained unless the lien is obtained by judgment, attachment, levy, or
similar legal process in connection with a court action or proceeding against
the debtor.
(3) If the owner of
a homestead dies, leaving a surviving spouse but no children, the homestead is
exempt, and the rents and profits of the homestead shall
accrue to the benefit of the surviving spouse before his or her the surviving
spouse's remarriage, unless the surviving spouse is the owner of a
homestead in his or her the surviving spouse's own right.
Sec. 6023b. (1)
The exemptions provided under this chapter are available to a resident and
apply regardless of where the property is located.
(2) In an action to collect a debt against an individual who is not a
resident, the court shall apply the exempt property laws of the state with
which the individual has the most significant contacts.
Sec. 6023c. Only
the judgment debtor's interest in property is subject to execution or another
creditor's remedy under this act. If a judgment creditor is on notice, or is
placed on notice by an objection, that another person claims an interest in the
property with or instead of the debtor, the judgment creditor must establish
through a hearing as described in section 6023g that the debtor's share exceeds
the amount protected by this section. A debtor's interest in a joint bank or
similar account is subject to any ownership presumption created under law and,
to the extent that a presumption may be rebutted, is based on the debtor's
contributions to the account, as determined by the tracing rules in section
6023e, in order to protect the interest of the person that is not the debtor.
Each person with an interest in property may claim the person's full exemption
amount applicable to that type of property.
Sec. 6023d. The
exemptions provided by this chapter do not apply to any of the following:
(a) The enforcement of a support order or order of income withholding as
those terms are defined in section 2 of the support and parenting time
enforcement act, 1982 PA 295, MCL 552.602.
(b) The enforcement of a judgment regarding the division of property
between spouses, former spouses, domestic partners, or former domestic partners
entered by a court in accordance with an administrative or civil procedure that
is established by state or federal law, that affords substantial due process,
and that is subject to judicial review.
(c) A levy of the federal government, this state, or a governmental unit
of this state to satisfy a tax liability.
(d) A levy under section 15(m) of the Michigan employment security act,
1936 (Ex Sess) PA 1, MCL 421.15.
Sec. 6023e. (1)
Money received from the sale or transfer of property
that was, before the sale or transfer, exempt or partially exempt under
this chapter or other law remains exempt to the extent of the previously
available exemption for 18 months while in the debtor's possession, in a
checking or similar account, in a savings account, or in a certificate of
deposit with a term that does not extend past the 18 months.
(2) If property, or a part of property, that could have been claimed as
exempt or partially exempt has been taken by condemnation or has been lost,
damaged, or destroyed and the owner has been compensated or indemnified for the
taking, loss, damage, or destruction of the property, the traceable proceeds
are exempt to the extent of the previously available exemption for 18 months
after the proceeds are received.
(3) If money received from the sale, transfer, taking, loss, damage, or
destruction of an exempt asset is transferred out of an account into which the
money was originally deposited on receipt, the money does not retain the
exemption unless the money is converted into another type of exempt property or
exempt asset.
(4) Money or other property and proceeds that are exempt under this
chapter or other law of this state are traceable under this section by
application of the first-in, first-out rule.
Sec. 6023f. (1)
Except as provided in subsection (2), on an adjustment date, the state
treasurer shall adjust each dollar amount in this chapter or, for each
adjustment after the first adjustment date, the most recent adjusted amount, by
an amount determined by the state treasurer to reflect the cumulative change in
the Consumer Price Index for the adjustment period and rounded to the nearest
$25.00. The state treasurer shall publish the adjusted amounts. The adjusted
amounts apply to cases filed after March 31 following the adjustment date.
(2) On an adjustment date, or as soon as practicable based on the
availability of the home price index, the state treasurer shall adjust the
dollar amounts in section 6023(1)(k) or, for each adjustment after the first
adjustment date, the most recent adjusted amounts, by amounts determined by the
state treasurer to reflect the cumulative change in the home price index for
the adjustment period and rounded to the nearest $25.00. The state treasurer
shall publish the adjusted amounts. The adjusted amounts apply to cases filed
after March 31 following the adjustment date.
(3) As used in this section:
(a) "Adjustment date" means March 1 of every third year after
the year in which the amendatory act that added this section takes effect.
(b) "Adjustment period" means the 3-year period ending on
December 31 preceding the adjustment date.
(c) "Consumer Price Index" means the Consumer Price Index for
all urban consumers in the area of Detroit-Warren-Dearborn, Michigan, published
by the United States Department of Labor or, if the United States Department of
Labor ceases publishing that index, the most similar index available.
(d) "Home price index" means the FHFA Expanded Data House
Price Index for the United States, calculated and published by the Federal
Housing Finance Agency, or, if that index is no longer calculated and
published, the most similar index available.
Sec. 6023g. (1) A
person shall not levy execution or attach property unless appointed by the
court and executing the court's writ or order to seize property that states the
value of property to be seized and the manner of levy.
(2) Upon entry of a judgment in an action to collect a consumer debt,
the clerk of the court shall mail a notice to the last known address of each
judgment debtor stating that the judgment debtor is responsible for paying the
judgment but that the court will not require it to be paid with exempt income,
assets, or property. The notice must also provide information about how the
debtor may file a request for installment payments. The clerk shall note the
address to which the notice is mailed in the record. If the notice is returned
undelivered, the clerk shall also note that in the record.
(3) When a judgment creditor obtains a writ of execution or order to
seize property, the clerk of the court, court officer, sheriff, or other agent
of the court shall give a notice in the form prescribed by the court to the
judgment debtor and to any person in possession of the property involved. The
notice must state the person's right to a hearing to claim exemptions that are
not self-executing, to contest the seizure of exempt or necessary property, or
to seek to set aside the judgment, and the steps the person may take to assert
these rights. If documents are served on the person in connection with the
execution, this notice must be included with the documents, but otherwise it
must be given by first-class mail.
(4) At the time a judgment creditor subpoenas an individual for an
examination under section 6110, the judgment creditor shall also provide a
notice in a form prescribed by the court that the debtor is responsible for
paying the judgment, that the court will not require the judgment to be paid
with exempt income, assets, or property, and that the individual has the right
to a hearing to claim exemptions, to contest the seizure of exempt or necessary
property, or to seek to set aside the judgment.
(5) The state court administrative office, acting under the direction of
the supreme court, shall develop and make publicly available notices required
under subsections (2) to (4) and (6). The notices must list the most common
federal and state exemptions, give examples of income, assets, and property
that are commonly exempt, and list sources of additional related information,
such as this state's law libraries or the court's website. The notices must
also state that the judgment debtor may file a motion to set aside the judgment
and must list the most common grounds for such a motion, including improper
service or active duty military service at the time of the suit.
(6) If an item of property falls into a category that is fully exempt
under this chapter or for which the exemption depends on its value, or if an
exemption depends on the judgment debtor's designation of the property to which
the exemption will apply but the exemption appears to the executing officer to
be sufficient to exempt all of the judgment debtor's property, the executing
officer shall report that fact to the court and the judgment creditor and shall
not execute on the property. The property is presumed to be fully exempt unless
the judgment creditor requests and obtains a hearing and establishes that the
property does not fall into a fully exempt category or includes significant
value in excess of the amount exempt, or that the exemption is not sufficient
to exempt all of the judgment debtor's property. The judgment creditor must
request the hearing not later than 21 business days after the executing
officer's report. Notice of the hearing in a form prescribed by the court must
be mailed to or otherwise served on the debtor and describe the steps the
debtor may take to contest the judgment creditor's claim as to the value of the
property. The debtor may contest the judgment creditor's claim by appearing in
person or through an attorney.
(7) If an exemption under this chapter depends on the judgment debtor's
designation of the property to which the exemption will apply, and the
exemption does not appear to the executing officer to be sufficient to exempt
all of the judgment debtor's property, the executing officer shall provide the
judgment debtor a form and written instructions, developed and made publicly
available by the state court administrative office acting under the direction
of the supreme court, for designating the property to which the exemption will
apply. If the debtor does not file the designation with the court within 7
business days after receiving the form, the executing officer shall designate
the items that will be exempt. If the debtor files a designation, the clerk of the
court shall notify the judgment creditor. The items designated by the judgment
debtor are presumed to be exempt unless the judgment creditor requests a
hearing not later than 10 business days after the clerk's notification and
establishes at the hearing that the value of the property exceeds the
exemption. The hearing must be conducted as set forth in subsection (6).
(8) The state court administrative office, acting under the direction of
the supreme court, shall develop and make publicly available notices to
garnishees that describe the exemptions applicable to particular types of
garnishment. The forms shall instruct the garnishee not to turn over money or
other property that the garnishee can reasonably identify as exempt, but
instead to report back that the money or property is exempt.
(9) If a judgment creditor obtains a writ of execution or order to seize
property, the debtor is entitled to a prompt hearing to claim exemptions,
contest the seizure of exempt property, or seek to set aside the judgment.
(10) Costs incurred in making, or proposing to make, a levy on property
must be paid out of the proceeds of a sale of the property if a sale occurs. If
the proceeds of a sale of the property are insufficient to cover the costs
incurred in the levy, garnishment, or attachment, the judgment creditor shall
pay the costs and may not recover them from the debtor or the garnishee,
notwithstanding any agreement of the parties to the contrary.
(11) As used in this section, "consumer debt" means an
obligation or alleged obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance, or services that are the
subject of the transaction are primarily for personal, family, or household
purposes, whether or not the obligation has been reduced to judgment.
Sec. 6027. If the homestead of any debtor
is appraised at a value of more than $3,500.00, the exemption available under this chapter and cannot
be divided, the debtor shall does not for that reason lose the benefit of the
exemption. ; but in
such cases the The officer who levies the execution shall deliver a notice,
attached to a copy of the appraisal, to the debtor or to some of his a member of
the debtor's family of suitable age to understand the nature thereof, of the notice that
unless the debtor pay pays the officer the surplus over and above the $3,500.00, exemption
available under this chapter or the amount due on the execution within not later than 60
days thereafter, after
delivery of the notice, the premises will be sold.
Sec. 6059. (1) In case If the
surplus, or the amount due on the execution or judgment, is not paid according to the provisions of section 6027, of this chapter, it
shall be lawful for the officer to may advertise and sell the said premises, and pay to the debtor out of the proceeds of said the sale to pay such debtor the sum of $3,500.00, which shall be exempt from execution
for 1 year thereafter, amount of the exemption
available under this chapter, and apply the balance on said the execution.
(2) No A sale may not be made in the case
last mentioned, under this section unless
a an amount greater
sum than $3,500.00
the exemption available under this chapter is
bid therefor, for
the property. in which case If an amount greater than the available exemption is not
bid, the officer may return said the execution for want of
property, unsatisfied or report the
facts to the court in which said that entered the judgment,
was rendered, as the case may require.as required.
(3) An
amount paid to the debtor under this section remains exempt under this chapter
in the same manner as money received from the sale or transfer of property
under section 6023e(1).
Sec. 6104. (1) After
judgment for money has been rendered entered in an action in any
a court of this state, the judge may, on upon motion in that the action or
in a subsequent proceeding, do any of the following:
(a) (1) Compel
a discovery of any property or things in
action belonging to a judgment debtor, and of any property, money, or things in
action due to him, or held in trust for him;the judgment debtor.
(b) (2) Prevent
the transfer, payment, or delivery of any
property, money, or things in action , or the payment or delivery thereof to the
judgment debtor. ;
(c) (3) Order
the satisfaction of the judgment out of
property, money, or other things in action, liquidated or unliquidated, that are not exempt from execution. ;
(d) (4) Appoint
a receiver of any property the judgment debtor has or may thereafter acquire. ; and
(e) (5) Make
any order as within his that in the judge's discretion seems appropriate in regard to carrying carry out the full intent and purpose of these provisions this
chapter to subject any nonexempt assets of any
a judgment debtor to the satisfaction of
any a judgment
against the judgment debtor.
(2) The court
may permit the proceedings under this chapter to be taken although execution
may not issue and although other proceedings
may not be taken for the enforcement of the judgment. However,
the court may not permit proceedings under this chapter if the result would be
to allow the enforcement of the judgment in a manner that is otherwise
expressly prohibited under this act or that would result in the evasion of
express prohibitions under this act.
(3) It is not
necessary that execution be returned unsatisfied before proceedings under this
chapter are commenced.
Enacting section 1. This amendatory act takes effect
180 days after the date it is enacted into law.