Debt collection law in Michigan is confusing to understand and expensive to violate. Landlords, contractors, and creditors who are owed money may face legal jeopardy if they attempt to collect a bill without respecting the rights of debtors.
In addition to a messy legal battle that could quickly spiral out of control, they could also suffer reputational damage that lingers.
Luckily, the experts at Hanna & Jarbo have prepared a list of everything you need to know about debt collection law, Michigan. Ready to ensure speedy repayment without violating the law?
What Is the Statute of Limitations on Debt in Michigan?
Creditors trying to collect the money they’re legally owed must understand the statute of limitations on debt if they want to avoid wasting their valuable time and money. Michigan collection laws only allow for debts to be collected up until a certain time.
A statute of limitations on debt refers to the amount of time that can pass before a debt becomes “stale” and incapable of being collected. If the statute of limitations on burglary was 10 years, then a burglar could not be charged if more than 10 years had passed since the alleged crime in question.
Statutes of limitation on debt exist to limit when legal action can be taken. The idea is that a crime that happened very long ago is now “settled” by the passage of time, making it worthless to investigate or prosecute that crime today.
Statutes of limitations on debt usually come from two sources: state-level laws and federal laws such as the Fair Debt Collection Practices Act (FDCPA).
Why Michigan has a Statute of Limitations On Debt
Like other Western legal concepts such as “ownership,” statutes of limitation have origins in Ancient Roman society. Then and now, legal systems were overwhelmed with too many cases, so implementing time restraints on cases eased the burden on courts and judges.
Roman legal norms impacted the development of English law, which in turn shaped the creation of the American legal system. From ancient Rome, through English history, modern American law is heavily modeled on systems that came before it.
What is the statute of limitations on debt in Michigan? According to the Debt Management Act passed by Michigan lawmakers, the statute of limitations on debt in Michigan is six years “after the cause of action.”
This means that creditors have six years after the alleged violation of the law to take legal action against debtors who owe them money. If a debtor violated the law on January 1st, 2020, legal action may be taken until January 1st, 2026, but not thereafter.
It’s critical to understand that the six years begins after the alleged “cause of action,” not the discovery of wrongdoing. If a crime was committed on January 1st, 2020, but not discovered until January 1st, 2023, the statute of limitations is still January 1st, 2026.
Licensed debt collectors in Michigan who violate the Debt Management Act may be found “guilty of a felony and shall be fined not more than $5,000.00, or imprisoned not more than 2 years, or both.”
Statute of Limitations on Credit Card Debt
Michiganders have lower levels of debt than the national average, but they still have to pay what they owe when it’s collection time. The statute of limitations on debt in Michigan established by the Debt Management Act cited above applies to every debt in Michigan.
Every debt in Michigan has a six-year statute of limitations under the Debt Management Act. This also applies to the statute of limitations on credit card debt in Michigan. Credit card violations may be pursued for up to six years after the initial cause of action.
If a debt in Michigan is older than six years, creditors cannot take any legal action. The statute of limitations on debt also includes federal legislation that covers Michigan.
These laws passed at the federal level were not approved by Michigan lawmakers but still govern Michigan creditors and debtors. The statute of limitations on debt under such federal law is only one year.
Fair Debt Collection Practices Act
The previously discussed Debt Management Act that establishes a six year statute of limitations is a state-level law passed by state legislators. It only applies to those within Michigan and cannot be enforced elsewhere, such as in Ohio or Wisconsin.
The Fair Debt Collection Practices Act is a federal piece of legislation passed by the United States Congress that applies to all Americans. This important law protects debtors and tells creditors how they can legally collect unpaid debts they’re owed.
A Michigan collection agency will always be subject to the FDCPA. Local status does not exempt any individual or organization from adherence to federal law.
Any violation of the FDCPA can result in legal action, even if the violation in question would be permitted under Michigan’s state laws. Thanks to the Supremacy Clause of the United States Constitution, federal laws take priority over state and local laws.
The FDCPA prohibits creditors from using certain debt collection tactics. A Michigan collection agency cannot call debtors at odd hours of the night, for instance, or misrepresent themselves when introducing themselves to debtors.
The statute of limitations for a violation of the Fair Debt Collection Practices Act is one year after the alleged violation occurs. This means Michigander debt collectors may face legal action for up to one year under the FDCPA, though they could also face legal action for up to six years under Michigan’s Debt Management Act.
Important Michigan Collection Laws
A Michigan collection agency must obey both federal and local laws. While federal laws are often more severe, certain Michigan collection laws may be particularly painful to violate.
- The Regulation Of Collection Practices Act of 1981
- The Occupational Code – Act 299 of 1980
- The Revised Judicature Act of 1961
- The Uniform Commercial Code of Michigan
- The Worker’s Disability Compensation Act Of 1969
Some of these are not technically Michigan collection laws but nevertheless apply to debt collecting. Under the Worker’s Disability Compensation Act, for instance, worker’s compensation benefits cannot be garnished for debt collection purposes.
The two Michigan laws that do specifically focus on governing debt collection closely mirror their federal counterparts. A Michigan collection agency may not know the fine differences between the two, but a debt collection lawyer will understand the nuances.
Best Debt Collectors In Michigan
The debt collection experts at Hanna & Jarbo achieve debt collection in 85% of every case. You won’t find better debt collection services anywhere in the Midwest.
Our seasoned legal specialists are experienced in commercial debt collection, skip tracing, litigation services, and post judgement collection. We’ll walk you through every step of the debt collection process in Michigan to ensure you’re paid every penny they owe.
Named one of the Best Law Firms in the country by U.S. News & World Report, Hanna & Jarbo’s unparalleled excellence will help you reclaim past-due, charged off, and seriously delinquent debt. We’re the best debt collectors in Michigan and have the record to prove it.
Specialty practice areas
Hanna & Jarbo’s team of lawyers are skilled in a number of specialty practice areas. These unique legal niches demand special expertise that many other Midwest collection agencies simply can’t provide.
Whether you’re a landlord, contractor, or business owner, our lawyers are ready to help you reclaim your money. As the premier debt collectors in Michigan, we take pride in our unrivaled prowess in the following specialty practice areas:
- Supplier Account Receivables
- Returned Checks (including charge-back credit card payments)
- Landlord-Tenant Debt & Money Judgments
- Charged-off or non-paying commercial credit portfolios
- Construction debts
- Auto loan and deficiencies
- General loans, notes, and credit lines in default
- Secured and unsecured judgments or liens
Perks of working with us
Hanna & Jarbo quickly collect your unpaid debts without any effort required on your end. From the start of the skip tracing process until the debt has been collected in full, our legal experts will take care of the messy work involved in debt collection.
Need a debt collector, Michigan? Our debt collection services provided positive results to nearly every client. With an impressive 85 percent success rate, we’re the best in the Midwest at debt collection.
Hanna & Jarbo never charges you out of pocket – we’re not paid until your debts are collected. By getting it right fast the first time, we save you money.
For how long can a debt be collected?
Any debt in Michigan can be collected for up to six years. Once a judgement has been obtained in a court, collections could potentially occur nearly indefinitely, provided the judgement is renewed every few years.
What about debts older than six years?
Under the Michigan Debt Management Act, debts older than six years can no longer be legally collected for any reason. If a judgement has been obtained in court before the statute of limitations on debt occurs, collection may continue after six years.
Will paying off my debt improve my credit?
Generally speaking, credit agencies rate individuals based on how likely they are to repay what they owe. Paying off debts may not immediately improve credit scores, but could prevent them from sinking lower due to future missed payments.
What is wage garnishment?
Wage garnishment is when a portion of your paycheck is used to pay off your overdue debts in the wake of a legal judgement. Wage garnishment requires a legal ruling (or “judgement”) that’s the result of a lawsuit.
You can usually be garnished up to about 25% of your take-home pay. The exact amount of garnishment often depends upon the level of debt owed and your income.
Is there a Wage Garnishment Statute Of Limitations?
Not necessarily; wage garnishment can only occur after a legal judgement has been obtained, but once garnishment does begin it may not ever end until the debt is fully paid back.
Judgements that allow for wage garnishment often expire, usually after 10 years, but they can be renewed over time. Given that debt collection lawyers can perpetually renew judgements, a wage garnishment statute of limitations effectively does not exist.
Can a creditor garnish my wages after 7 years?
Creditors can only garnish wages with a legal judgement that was obtained from a successful lawsuit. They only have six years under the statute of limitations on debt to pursue that lawsuit.
If a judgement has been secured before the statute of limitations expires, garnishment can continue even after 7 years. The extent to which wages can be garnished always depends upon the specific legal judgement allowing such garnishment in the first place.
What is a judgement?
A judgement refers to a ruling from a court as a result of a lawsuit. In the context of debt collection, judgements usually refer to orders from the court to debtors requiring them to pay what they owe to creditors.
Sometimes, judgments allow creditors to seize the property of debtors or garnish their wages for a certain period of time.
How long do Judgments last in Michigan?
The length and scope of a specific judgement may be unique. There’s no one-size-fits-all template for issuing legal rulings. A debt collection attorney will be able to understand and enforce the details of your judgement.
Start Getting Paid By Contacting Hanna & Jarbo
Why risk losing the money you’re legally owed? The statute of limitations on your debt may be rapidly approaching. Wait too long, and your money will be lost forever.
Contact Hanna & Jarbo today to start the collection process and guarantee repayment. With our debt collection services on your side, payday is just around the corner.