Bill Text: MI SB0408 | 2023-2024 | 102nd Legislature | Engrossed
Bill Title: Civil procedure: execution; procedures for collection of judgments; revise. Amends secs. 2807, 4011, 4015, 4031, 4061a, 6023, 6027, 6059 & 6104 of 1961 PA 236 (MCL 600.2807 et seq.) & adds secs. 4001a, 4032, 4033, 6001a, 6023b, 6023c, 6023d, 6023e, 6023f, 6023g & 6023h.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Engrossed - Dead) 2024-12-12 - Placed On Second Reading [SB0408 Detail]
Download: Michigan-2023-SB0408-Engrossed.html
Substitute For
SENATE BILL NO. 408
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 On 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 On 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 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 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 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 failure to comply with the garnishment was inadvertent or caused by an administrative error, mistake, or other oversight and it 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 On a 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 requiring 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 in effect at the time 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 workforce opportunity wage act, 2014 PA 138, MCL 408.411 to 408.424.
(b) Fifteen percent of the debtor's garnishable earnings for the week.
(3) In calculating the amounts that are subject to garnishment 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 debtor a fee for any actions taken by the financial institution in connection with a garnishment served on the financial institution, unless the fee is a reasonable fee that 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 On 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 October 31, 2026, 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.
(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.
(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, 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. 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.$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 percent 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 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 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 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 or former spouses or 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, or of 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 it was originally deposited on receipt, it does not retain the exemption unless it 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) On 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, to contest the seizure of exempt property, or to 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 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 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.
