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HB 4900

Civil procedure: execution; procedures for collection of judgments; revise. Amends secs. 4011, 4015, 4031, 4061a, 6023, 6027, 6059 & 6104 of 1961 PA 236 (MCL 600.4011 et seq.) & adds secs. 4001a, 4032, 4033, 6001a, 6023b, 6023c, 6023d, 6023e, 6023f & 6023g.

2023-2024 Regular Session Introduced by Felicia Brabec and 16 co-sponsors

HB 4900 broadens exemptions and protections in Michigan garnishments, boosting debtors’ shield while tightening notices, bank disclosures, and anti-retaliation rules.

bill ordered enrolled 12/23/2024
#civilprocedure:execution #civilprocedure:garnishment #civilprocedure:other
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Bill Summary · HB 4900

Summary — HB 4900 (Substitute H-2): Garnishment, Execution of Judgment, and Related Definitions

Sponsor: Rep. Kara Hope
Law amended: Revised Judicature Act of 1961 (1961 PA 236; multiple MCL sections amended and new sections added, including 4001a and 6001a)
Status (key actions): Passed House (12/13/2024), Passed Senate (12/20/2024), bill ordered enrolled (12/23/2024); full title agreed (12/31/2024). Fiscal analyses completed 12/18–1/27/25.

Main purpose

HB 4900 revises Michigan law governing garnishment and execution (judgment collection) to (1) expand and clarify exemptions from garnishment and execution, (2) change procedures and notice requirements for garnishments and executions, and (3) add definitions and protections for debtors (including workers and independent contractors).

Key provisions and changes

  • Definitions: Adds/clarifies terms (e.g., consumer, creditor, earnings, garnishment, garnishable earnings, exempt).
  • Expanded exemptions from garnishment:
    • Exempts means‑tested public assistance, unemployment benefits, federal and Michigan Earned Income Tax Credits (EITC), analogous local EITCs, disability benefits, and worker’s compensation from garnishment.
    • Protects weekly earnings that are less than the smaller of:
    • 35 × the greater of the state or federal minimum wage in effect; or
    • 15% of the individual’s garnishable earnings for the week (prorated for longer pay periods).
    • Example calculations cited in analyses: at $10.10/hr this would exempt ~$353.50/week; at $10.56/hr about ~$370/week.
  • Garnishable earnings: Defined as earnings after legally required withholdings (taxes, Social Security, etc.) and after an additional deduction of up to 15% for employer‑withheld health insurance/medical expense contributions.
  • Bank account treatment:
    • Financial institutions must identify and calculate amounts deposited from exempt sources during the 90 days before service of a garnishment and disclose those amounts.
    • Institutions may not charge debtors fees for garnishment actions unless the fee is reasonable and disclosed in the regular fee schedule.
    • If multiple institutions are served, plaintiff must aggregate and file/calculates exemptions and nonexempt amounts; debtors have 7 days to object; absent objection institutions must turn over nonexempt funds.
  • Wage sources and labor:
    • Eliminates the ability to garnish amounts owed to a defendant because of personal labor performed by the defendant or family (narrowing prior authority).
  • Tax refund/EITC protection:
    • Beginning after Oct. 31, 2026, for consumer‑debt garnishments, the State Treasurer must, to the extent practicable, reduce the intercepted state tax refund/credit delivered to a plaintiff by the portion that is payment of the Michigan EITC.
  • Notices and forms:
    • Requires the State Court Administrative Office (under the Supreme Court) to develop a standard notice to garnishees describing exemptions and instructing garnishees not to turn over reasonably identifiable exempt property.
  • Priority, fees, and protections:
    • Clarifies order of garnishment priority (follows §4012). Support (child/spousal) withholding orders and tax levies retain priority.
    • Extends anti‑retaliation protections: garnishees may not discipline, discharge, refuse to hire, or refuse to contract with an individual because of prior garnishment actions. Courts must order reinstatement/compensation and award reasonable attorney fees and costs where violations occur.
  • Process/fees: Continues a $1.00 fee payable to a garnishee at service (subject to exceptions in law).

Who is affected

  • Debtors (consumers), particularly low‑income workers and recipients of public benefits — greater protections and larger exempt amounts.
  • Creditors and debt buyers — reduced recoverable funds in many garnishment cases and potentially fewer successful garnishments.
  • Employers, financial institutions, and courts — new procedural and disclosure duties; small administrative costs to implement forms and calculations.
  • State Treasury — may need to adjust interception procedures for tax credits (notably Michigan EITC).

Procedural/timeline notes and fiscal impact

  • Tax refund reduction for Michigan EITC becomes effective after October 31, 2026 (as specified).
  • Debtors get a 7‑day window to object to financial institution calculations of exempt funds.
  • Fiscal analyses anticipate small increases in administrative costs for the State Court Administrative Office and local courts for new notices/forms and some procedural changes; likely indirect reduction in garnishment filings and related fees administered by Treasury.

Overall effect

HB 4900 significantly increases consumer protections in Michigan’s garnishment and execution rules by broadening exemptions (especially for low‑income earners and tax credits), strengthening notice and bank disclosure requirements, clarifying priorities, and expanding anti‑retaliation protections — while imposing modest new administrative duties on courts, financial institutions, and creditors.

Compiled from official sources — confirm details with the bill’s official record.

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