An order appointing Receiver and Judgment of Separate Maintenance from the Circuit Court for O~ County, Michigan is not legal process for garnishment. In addition, full withholding of benefits, as requested in the Judgment of Separate Maintenance, cannot be honored because garnishment is subject to state and federal Consumer Credit Protection Act (CCPA) limits.

QUESTION

You asked whether a November XX, 2015 Order Appointing Receiver submitted by the F~ Law Firm, appointing D~ as receiver (the “Receiver”) of S~, is a court-ordered garnishment of alimony payments in Michigan, such that garnishment of Title II benefits is permissible. For the reasons discussed below, we conclude that the Order Appointing Receiver and the related Judgment of Separate Maintenance are not legal process appropriate to implement withholding. In addition, even if the Receiver subsequently serves SSA with legal process, the Agency cannot comply with his request that he be assigned one hundred percent of S~’s benefits, because the garnishment amount is restricted under applicable Michigan and federal law.

BACKGROUND

S~ currently receives Title II retirement insurance benefits. He and his wife, M~, obtained a Judgment of Separate Maintenance on May XX, 2015, from the Circuit Court for the County of O~, Michigan. In Michigan, married couples can obtain a separate maintenance order, dividing assets in a manner similar to divorce, but without dissolving the bonds of matrimony. See Mich. Comp. Laws § 552.7. The Judgment of Separate Maintenance obligated S~ to “pay, through the Michigan State Disbursement Unit,” $4,000 per month of spousal support until M~’s death or further order of the court. Id. at ¶ 2. Paragraph 5(e) of the Judgment of Separate Maintenance indicated that one hundred percent of S~’s Social Security benefits were his sole and separate property, “with the exception of the non-taxable spousal support amount as set forth in paragraph 2” of $4,000 per month.

On June XX, 2015, SSA received an Original Income Withholding Order/Notice for Support (“IWO” or “income withholding order”) from the O~ County, Michigan Friend of the Court, numbered 20XXXXXXXXX. The income withholding order ordered SSA to remit to the Michigan State Disbursement Unit $4,083.50 per month ($4,000 plus $80 past-due spousal support and $3.50 intergovernment support arrears and/or fees) to satisfy his spousal support obligations to M~. On June 18, 2015, SSA sent a letter to S~, explaining that SSA would begin withholding $1,148.40 monthly, starting July 2, 2015, pursuant to the income withholding order numbered 20XXXXXXXXX.

On November XX, 2015, the Circuit Court for O~ County, Michigan issued an Order Appointing Receiver, granting D~ “full powers as receiver of all of [X~’s] assets and property, real, personal or mixed, tangible and intangible, and wherever situated,” for the purpose of enforcing the May 2015 Judgment of Separate Maintenance. The court noted that the Receiver’s powers were subject to the limitations in two other documents not provided to SSA: an October XX, 2015 Order Granting in Part Renewed Motion to Enforce Judgment of Separate Maintenance and a Motion for Relief from Stay entered by the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division.

On August XX, 2016, A~ of the F~ instructed SSA to remit “any/all benefits payable to S~” to the Receiver at his office address.

A Termination of IWO dated February XX, 2017, terminated the June 2015 income withholding order numbered 20XXXXXXXXX. No reason for the termination was provided in the order. On March XX, 2017, SSA notified S~ that the Agency would no longer withhold alimony from his Social Security benefits.

U.S. Treasury Department offset notices dated July XX, 2017, and August XX, 2017, indicate that S~ had or has both tax and non-tax federal debt, for which part of his Social Security benefits were being withheld.

DISCUSSION

A state agency or individual which serves SSA with legal process may garnish Social Security Title II benefits to enforce an individual’s legal obligation to provide alimony. 42 U.S.C. § 659(a), (h)(1)(A)(ii)(I); 5 C.F.R. § 581.103(c)(1); 20 C.F.R. § 404.1820(b); POMS GN 02410.200(A). SSA is required to comply with legal process to enforce an individual’s support obligations “to the same extent as if the United States . . . were a private person.” See 42 U.S.C. § 659(a); see also 5 C.F.R. §§ 581.101(b), 581.305(a). “Legal process” is defined as “any writ, order, summons, notice to withhold income pursuant to [Section 466 of the Social Security Act], or other similar process in the nature of garnishment” which — is issued by:

(1) a court of competent jurisdiction (domestic or foreign),

(2) an authorized official pursuant to a court order or state or local law, or

(3) a State agency authorized to issue income withholding notices pursuant to State or local law or pursuant to Section 466(b) of the Social Security Act; and

(4) is directed to a governmental entity to compel it to make a payment, from moneys otherwise payable to an individual, to another party in order to satisfy the individual’s legal obligation to provide child support or alimony.

See 42 U.S.C. § 659(i)(5); 5 C.F.R. § 581.102(f); POMS GN 02410.200(B).

Legal process must, on its face, conform to the laws of the issuing jurisdiction. See 5 C.F.R. § 581.305(a)(1); POMS GN 02410.210(A)(1)(b). Legal process must also be properly served on SSA in accordance with the law of the issuing state. See 42 U.S.C. § 659(c)(2); 5 C.F.R. § 581.202; POMS GN 02410.205.

The Receiver has repeatedly argued that he has completed legal process, relying entirely on the powers conferred onto him through the Order Appointing Receiver. He asserted in a supplemental written submission to our office that he qualifies as an “authorized official” pursuant to the court order appointing him as receiver. Further, he claimed that his written demands that SSA redirect S~’s Social Security benefits to him satisfy the requirement that legal process be “directed” to a governmental entity.

However, Michigan law does not delegate such broad powers to a receiver. Under Michigan law, if a party defaults on a spousal or child support obligation, a court can (1) appoint a receiver for the purpose of sequestering real and/or personal property and (2) “cause the personal estate and rents and profits of the real estate to be applied to the payment of defaulted alimony.” See Mich. Comp. Laws § 552.27(c); see also Brown v. Brown, 335 Mich. 511, 518 (1953). The plain language of the statute does not delegate any authority to the receiver to garnish and redistribute earnings independent of court action. Instead, Michigan law places the responsibility “for the centralized receipt and disbursement of support” with the State Disbursement Unit and “office of the friend of the court.” Mich. Comp. Laws § 552.24.

Consistent with applicable statutes, Michigan cases illustrate the need for a court order or action of the friend of the court in implementing garnishments in a divorce context. See, e.g., Wiand v. Wiand, 443 N.W.2d 464, 467 (1989) (court ordered party in default of spousal support payments to execute wage assignment); Sommerville v. Sommerville, 417 N.W.2d 574, 575 (1987) (even though receiver was authorized to discover and liquidate all of husband’s property to satisfy judgment against him under divorce property settlement, receiver still needed to obtain writ of garnishment or court order to garnish husband’s pension); Schaeffer v. Schaeffer, 308 N.W.2d 226, 228-29 (1981) (court ordered party in default of spousal support payments to execute wage assignment); Petrie v. Petrie, 199 N.W.2d 673, 675 (1972) (court appointed friend of the court as a receiver for the purpose of taking possession of workers compensation payments and applying proceeds toward unpaid alimony); McDonald v. McDonald, 88 N.W.2d 398, 399 (1958) (as receiver, friend of the court was authorized to collect monthly pension checks and apply proceeds to alimony). A receiver “stands in the shoes” of the person or estate whose interests he was appointed to represent and “can enforce only such rights and contracts or maintain only such action or defense as could be enforced or maintained” by that person or estate. Coppola v. Manning, No. 323994, 2015 WL 7288050, at *4 (Mich. Ct. App. Nov. 17, 2015) (citing 75 C.J.S. Receivers § 392). Because a receiver’s powers are limited to those specified in statutes, court rules, and court orders, see Woodliff v. Frechette, 236 N.W. 799, 800 (1931), none of which grant the Receiver judicial powers to garnish income, we conclude that the Receiver is not an “authorized official” empowered to issue a writ, order, summons, or notice to withhold income compelling SSA to withhold payments for spousal support. Thus, the Receiver must complete legal process to garnish Social Security benefits in the same way any other party would in the state of Michigan.

In Michigan, a party can complete legal process to withhold income for spousal support by obtaining an income withholding order. A party could also attempt to obtain a writ of garnishment, but likely would have difficulty prevailing for the reasons explained below. The Receiver provided no evidence that he completed either form of legal process.

Under the Support and Parenting Time Enforcement Act, the circuit court will provide an order of income withholding with each support order entered or modified by the court. Mich. Comp. Laws Ann. §§ 552.602(u), 552.604. The office of the friend of the court has various responsibilities in enforcing income withholding orders. See, e.g., Genesee Cty. Friend of Court v. Gen. Motors Corp., 626 N.W.2d 395, 396 (2001). A notice of income withholding must contain certain language notifying the recipient of applicable law, including federal limits on withholding; the effective date of orders of withholding; priority of orders over other legal process; the possibility of contempt proceedings; and the requirement that the source notify the office of the friend of the court if income will be terminated. Mich. Comp. Laws Ann. § 552.609(2)(c) (citing §§ 552.611, 552.611a, 552.612, 552.613, 552.614, 552.623). The notice of income withholding must also instruct the garnishee to pay funds directly to the Michigan State Disbursement Unit or the office of the friend of the court. See Mich. Comp. Laws §§ 552.24, 552.609(2)(d).

Here, we are not aware of any valid income withholding order for spousal support. The Receiver has not provided a copy of any income withholding order. The only income withholding order for spousal support in S~’s claims file (number 20XXXXXXXXX) was terminated pursuant to the February 6, 2017 Termination of IWO. The documents that the Receiver provided to SSA—the Judgment of Separate Maintenance and Order Appointing Receiver—do not contain the language required under Michigan law for an income withholding order. See, e.g., Mich. Comp. Laws Ann. § 552.609. Thus, the documents do not satisfy the requirement that legal process must, on its face, conform with state law. See 5 C.F.R. § 581.305(a)(1); POMS GN 02410.210(A)(1)(b). Furthermore, any amounts subject to withholding pursuant to an income withholding order would be payable to the Michigan State Disbursement Unit or office of the friend of the court, not to the Receiver. See Mich. Comp. Laws §§ 552.24, 552.609(d).

The other method of completing legal process would be to obtain and properly serve a writ of garnishment. However, we believe it is unlikely that the Receiver would be able to obtain a writ of garnishment for spousal support because a Michigan court likely would conclude that spousal support cannot be sought through a garnishment action. See Toth v. Toth, 217 N.W. 913, 915 (1928) (garnishment must be based on judgment or final decree regarding debt, but garnishment action cannot be maintained on a decree for alimony, which is not a debt); see also Sommerville, 417 N.W.2d at 575 (garnishment is remedy for money owed under property settlement of divorce, whereas income withholding by office of friend of court only applies to alimony or child support); Beyerlein v. Ashburn, 53 N.W.2d 666, 667 (1952) (garnishment action was a proper remedy to recover costs of appealing alimony dispute).

In any case, here the documents the Receiver provided are not a writ of garnishment pursuant to Michigan law. A party requesting garnishment must file the required documentation in substantially the same form approved by the state court administrator. Mich. Ct. Rules 3.101(C). The required documentation includes a writ of garnishment, a disclosure form, and a verified statement that (1) indicates judgment against the defendant has been entered but remains unsatisfied; (2) provides the original and outstanding judgment amount, interest, costs, and other related details; and (3) affirms knowledge or good reason to believe that the garnishee has property belonging to or a financial obligation owed to the defendant. See Mich. Ct. Rules 3.101(C)-(D). If the garnishment request satisfies all legal requirements, the clerk of the court will issue a writ of garnishment. Mich. Ct. Rules 3.101(D). Within 182 days after issuance, the party requesting garnishment must serve upon the garnishee a writ of garnishment and other required documentation and fees. Mich. Ct. Rules 3.101(F). SSA will only comply with legal process once a writ of garnishment has been properly served under state law. See 42 U.S.C. § 659(c)(2); 5 C.F.R. § 581.202; POMS GN 02410.205.

The Judgment of Separate Maintenance and Order Appointing Receiver are not “substantially in the form approved by the state court administrator,” as required under Michigan law. Mich. Ct. Rules 3.101(C). Therefore, in light of Michigan law on garnishment, the Order Appointing Receiver does not satisfy the requirement that legal process must, on its face, conform with state law. See 5 C.F.R. § 581.305(a)(1); POMS GN 02410.210(A)(1)(b).

In sum, neither the Judgment of Separate Maintenance nor the Order Appointing Receiver complies with state laws on withholding of income, either under the framework of income withholding for spousal support or writs of garnishment. Furthermore, the documents do not satisfy the other requirements of legal process. Neither of the two documents makes any provision for income or benefits withholding by any third-party payors and therefore cannot satisfy the requirement that they be “in the nature of garnishment.” See 42 U.S.C. § 659(i)(5); 5 C.F.R. § 581.102(f); POMS GN 02410.200(B). In addition, neither document satisfies the requirement that it be “directed to . . . a governmental entity” to compel payment to another party. Id.

Because the Judgment of Separate Maintenance and Order Appointing Receiver do not constitute a valid income withholding order or a writ of garnishment, any garnishment of S~’s monthly Title II benefits would be prohibited by 42 U.S.C. § 407(a), which provides that “[t]he right of any person to any future payment under [Title II] shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process,” unless some other provision of law expressly provides for such collection.

CONCLUSION

In sum, we conclude that the Order Appointing Receiver and Judgment of Separate Maintenance are not legal process appropriate to implement withholding of S~’s Social Security benefits. In order to withhold a portion of S~’s Social Security benefits for spousal support, the Receiver, D~, should obtain from the circuit court or friend of the court an order of income withholding in compliance with the Support and Parenting Time Enforcement Act. The order’s language must direct a governmental entity to compel it to make a payment, from moneys otherwise payable to S~, to another party to satisfy his legal obligation to provide child support or alimony.

In addition, even if legal process is properly executed and served on SSA, the Receiver will not be entitled to full withholding of S~’s benefits as requested, because garnishment is subject to state and federal limits.

The garnishment of SSA benefits for the purposes of child support or alimony is established by a properly served order to garnish [as represented by an income withholding order (IWO)] from a court of proper jurisdiction. As the garnishment is an order of the court and not a determination of the agency, there are no appeal options to SSA for garnishment issues. Any questions or explanations on the order to garnish must be directed to the court of proper jurisdiction.

Any action to stop the garnishment of SSA benefits can only be made in response to a properly served order from the court of jurisdiction for the garnishment.

The garnishment of SSA benefits for the purposes of child support or alimony is established by a properly served order to garnish [as represented by an income withholding order (IWO)] from a court of proper jurisdiction. As the garnishment is an order of the court and not a determination of the agency, there are no appeal options to SSA for garnishment issues. Any questions or explanations on the order to garnish must be directed to the court of proper jurisdiction. Any action to stop the garnishment of SSA benefits can only be made in response to a properly served order from the court of jurisdiction for the garnishment.

BACKGROUND

In March 2009, the O~ County, Michigan, Friend of the Court issued an income withholding order (IWO) directed to SSA and seeking to garnish Mr. S~ retirement benefits. The IWO sought $438.50 per month from Mr. S~ benefits to cover an arrearage in child support payments for Mr. S~ son, Jonathan. In accordance with the IWO, SSA has apparently been garnishing Mr. S~ benefits.

The IWO lists an O~ County Friend of the Court contact number for further information, and, through that number, we were told that Mr. S~ is over $40,000 in arrears with child support payments.

In March 2007, Mr. S~ appeared at two criminal probable cause hearings in O~ Michigan. The subject of the hearings were whether there was probable cause to find that Mr. S~ was guilty of felony non-support (of his child) for the period November 1999 through June 2002. As part of the prosecutor’s case, a child support account specialist with the O~ County Friend of Court testified as to Mr. S~ child support arrearages. At the conclusion of the hearings, the state judge dismissed the charge, finding that the records with respect to Mr. S~ support payments from the O~ County Friend of the Court did not appear to be correct and contained contradictory amounts.

Based on the hearing testimony and the decision by the judge in the criminal non-support hearings, Mr. S~ has asked the agency to terminate garnishment of his benefits.

DISCUSSION

As you are aware, Social Security Title II benefits may be garnished to enforce an individual’s legal obligation to provide child support. 42 U.S.C. § 659(a), (h)(1)(A)(ii)(I); 5 C.F.R. § 581.103(c)(1); 20 C.F.R. § 404.1820(b); POMS GN 02410.200A. Specifically, the Agency is required to comply with "legal process," which is defined as "any writ, order, summons, or other similar process in the nature of garnishment" and which is issued by (1) a court of competent jurisdiction (domestic or foreign), (2) an authorized official pursuant to a court order or pursuant to state or local law, or (3) a State agency that is authorized to issue income withholding notices pursuant to state or local law or pursuant to the requirements of 42 U.S.C. § 666(b). 42 U.S.C. § 659(i)(5); 5 C.F.R. § 581.102(f); POMS GN 02410.200B.

Here, the IWO issued by the O~ County Friend of the Court constitutes “legal process.” The IWO is clearly a garnishment order directed to SSA, and the O~ County Friend of Court is a state agency that has statutory authority to issue IWOs. See Mich. Comp. Laws §§ 552.511(1) (authorizing the Friend of the Court office to initiate one or more support enforcement measures under the support and parenting time enforcement act where an arrearage has developed); 552.607 (providing for the issuance of IWOs by the Friend of the Court under the support and parenting time enforcement act). Thus, SSA is required to comply with the IWO. 42 U.S.C. § 659(i)(5); 5 C.F.R. § 581.102(f); POMS GN 02410.200B.

The outcome in Mr. S~ criminal probable cause hearing does not affect SSA’s obligation to comply with the IWO since the law discussed above does not give SSA any authority to consider whether the support obligation underlying the IWO is accurate or valid. This issue is addressed by POMS GN 02410.225(2):

Beneficiaries do not have any right of appeal to SSA regarding implementation of garnishment orders. They can appeal to the issuing court to dismiss or modify the order. An appeal by the beneficiary may result in a new court order superseding the previous order which, when served on SSA, requires adjustments to the garnishment withholding. If a garnished beneficiary notifies SSA that he/she intends to appeal the garnishment order, [him or her] that:

--The appeal alone might not cause any change in the withholding.

--SSA will comply with any new court order issued as a result of the appeal.

If a copy of an appeal is received, consult either the clerk of the court receiving the appeal or submit it to the regional office for submittal to the Regional OGC for instructions as to compliance with the original garnishment order while the appeal is pending.

POMS GN 02410.225(2). The dismissal of the criminal action did not directly impact the validity of the garnishment order. And the mere fact that there was insufficient evidence to proceed against Mr. S~ criminally does not mean that he is not civilly liable for the support.

CONCLUSION

For the reasons discussed above, we conclude that continued garnishment of Mr. S~ retirement benefits is proper notwithstanding the outcome of his criminal non-support case.