Collecting a Michigan Small Claims Judgment Against a Business

When the Debtor Is a Business, Not a Person

Collecting a small claims judgment against a business in Michigan follows the same statutory framework as collecting from an individual — but the practical mechanics differ. Businesses have different assets, different legal structures, and different vulnerabilities to enforcement tools.

The good news: businesses typically have bank accounts, receivables, and physical assets that individual debtors often lack. The challenge: you need to know where those assets sit and how the business is structured.

Business Structure Matters

The type of business entity affects where you can reach:

Sole proprietorship — There's no legal separation between the owner and the business. The judgment runs against the individual, so you can garnish the owner's personal wages from another employer, personal bank accounts, and personal property, in addition to any business accounts.

LLC or corporation — The judgment runs against the entity, not the individual owners. You're generally limited to the business's own bank accounts, receivables, and property. An owner's personal assets may be reached only if there is a separate legal basis for personal liability, such as a personal guarantee or a valid veil-piercing claim; a judgment against the business alone does not automatically authorize collection from an owner.

Partnership — General partners are personally liable for partnership debts under MCL 449.15, but a creditor must first execute against partnership assets before reaching an individual partner's assets. Commonwealth Capital Investment Corp v McElmurry, 102 Mich App 536, 541 (1980). Limited partners have liability limited to their investment.

Finding Business Assets

The debtor examination is your primary discovery tool, and it works the same way for businesses. File Form MC 11 (Subpoena / Order to Appear) after the 21-day waiting period.

For a corporation or partnership, the person who appears must be a full-time employee, officer, or director with personal knowledge of the business's finances under MCL 600.8408(2). At the examination, ask about:

• Business bank accounts — institution names, account numbers, typical balances
• Accounts receivable — who owes the business money and when payment is expected
• Equipment and inventory — vehicles, machinery, tools, stock
• Real property — any commercial real estate the business owns
• Other income streams — rental income, royalties, contract payments

Michigan business registrations (available through the Department of Licensing and Regulatory Affairs) show the registered agent and office address, which can help identify where the business operates and banks.

Garnishing a Business Bank Account

Bank garnishment (Form MC 13) is often the most effective tool against a business. Unlike an individual's account, which may hold protected Social Security deposits, a business checking account generally has no federal benefit protections.

File MC 13 with the $15 court fee, serve it on the bank with the $35 disclosure fee, and the bank freezes whatever's in the account at the moment of service. The 28-day hold and objection window still apply, but businesses rarely have garnishment exemptions to raise.

The limitation: nonperiodic garnishment is a snapshot. It captures only the balance at the moment of service. If the business keeps a lean operating account and sweeps funds elsewhere, one MC 13 might not capture much. Timing matters — serving the writ right after the business's typical deposit cycle (start of the month for rent collections, end of the week for retail receipts) improves your chances.

Garnishing Business Income Streams

If the business receives regular payments from a known source — a general contractor paying a subcontractor, a client on a retainer, a tenant paying rent to a landlord — you can serve a periodic garnishment (Form MC 12) on the payer. The payer becomes the garnishee and must withhold and remit the debtor business's income on the same schedule as wage garnishment.

The 25% disposable earnings cap under federal law applies to an individual's wages. It does not cap a business's periodic receivables; the garnishee remits payments as they become due under the writ, up to the unpaid judgment balance (15 U.S.C. §§ 1672–1673; MCR 3.101(G), (J)(2)).

Seizing Business Property

Form MC 19 (Request and Order to Seize Property) lets you reach physical business assets — vehicles, equipment, inventory, fixtures. A court officer or sheriff executes the seizure, and the property is sold at public auction with proceeds applied to your judgment.

The $15 filing fee is just the start. You'll advance the $55 levy fee, mileage, and actual costs for towing, storage, and auction advertising. These costs are added to the judgment balance and recovered first from sale proceeds.

For most small claims judgments (under $7,000), property seizure makes practical sense only when the business has identifiable, valuable assets that exceed the cost of seizure — a commercial vehicle, specialized equipment, or inventory worth pursuing.

Recording a Judgment Lien

If the business owns real property (a storefront, warehouse, or land), file Form MC 94 (Notice of Judgment Lien) with the Register of Deeds in the county where the property sits. The $15 court fee plus $30 recording fee creates a cloud on the title that must be cleared before the business can sell, refinance, or transfer the property.

The lien lasts 5 years and can be renewed once if it is rerecorded at least 120 days before expiration. For a business that owns its commercial space, this is one of the strongest tools available.

Putting It Together

Collecting from a business often involves layering multiple tools: a debtor examination to identify assets, a bank garnishment to capture available cash, a judgment lien to secure any real property, and possibly a property seizure for valuable equipment. The Michigan Judgment Collection Guide walks through each tool with the forms, fees, and deadlines specific to Michigan — including how to adapt the standard enforcement process when your debtor is a business rather than an individual.

See more Michigan guides →