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Debt Collection Laws in Michigan

Patrick Austin, J.D. | September 22, 2023

Patrick Austin
Attorney from George Mason
Patrick Austin, JD

Patrick Austin is a licensed attorney with a background in data privacy and information security law. Patrick received his law degree at George Mason University's Antonin Scalia Law School, where he served as the Editor-in-Chief for the National Security Law Journal.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Specific debt collection laws in Michigan, along with laws at the federal level, provide residents of the Wolverine State with a series of statutory rights and protections when engaging with debt collection agents and agencies.

If you live in Michigan and have debt collectors calling, emailing, or sending letters about an alleged debt, take solace in knowing you have legal rights and protections under both state and federal law, namely MI Comp L § 445 and the Fair Debt Collection Practices Act. Below, we break down these debt collection laws and how they apply to Michigan residents.

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Michigan debt collection laws protect you

MI Comp L § 445 is Michigan’s law that defines what a debt collector is, regulates debt collection practices, and more. Now, let’s get into the specifics.

What is a debt collector in Michigan?

MI Comp L § 445.251 (2022) regulates the licensing requirements for debt collection agents and agencies operating in the Great Lake State.

Under this law, a debt collector is anyone who is directly or indirectly involved in asking for a claim to be paid, trying to get a claim paid, or taking back something of value that is owed by another person, due to an agreement. This includes people who represent themselves as collection or repossession agencies or who perform such activities on behalf of someone else, as regulated by this act.

This also includes anyone providing forms or written demands that are represented to be used for collection or repossession of claims, and that indicate that a request or demand for payment is being made by someone other than the creditor, even if payment is directed to be made to the creditor.

Moreover, someone using a fictitious name or another person’s name in the collection or repossession of claims, to make the debtor believe that a third person is collecting or repossessing the claim, is also considered a debt collector. However, this does not include:

  • Regular employees collecting amounts for one employer in the employer's name.
  • Banks, trust companies, savings, and loan associations, and credit unions collecting their own claims.
  • Businesses licensed by the state under a regulatory act where collection activity is regulated.
  • An abstract company doing an escrow business.
  • Licensed real estate brokers or salespersons handling claims related to their real estate business.
  • Public officers or persons acting under a court order.
  • Attorneys handling claims and collections on behalf of clients and in their own name.

This law further defines other terms connected to debt, debt collectors, and debt collection practices. With these definitions in mind, let’s take a look at prohibited actions for debt collectors in Michigan.

Michigan debt collectors are prohibited from the taking these actions

Under MI Comp L § 445.252 (2022), Michigan debt collectors cannot:

  • Pretend to be lawyers or credit bureaus unless they really are
  • Use forms that look like they are from a court or government agency or that make people think they have official approval
  • Lie, mislead, or hide the reason for contacting a debtor to collect a debt
  • Misrepresent legal actions, legal rights of anyone involved, or the consequences of not paying the debt
  • Communicate directly with a debtor if the debtor has a lawyer, except through billing or if the lawyer doesn’t respond within 30 days
  • Share information about the debt with the debtor's employer unless the debtor allows it, it's a response to an employer's inquiry, or it's to find out where the debtor is
  • Use law enforcement officers or anyone who serves legal papers to collect a debt
  • Use or threaten to use physical violence to collect a debt
  • Publicly list debtors, except for credit reporting or in response to an inquiry about a debtor's credit
  • Publicly shame the debtor, except in legal proceedings
  • Harass or call the debtor repeatedly, especially at inconvenient times, and should only call between 8 a.m. to 9 p.m., unless the debtor agrees to other times
  • Use rude or obscene language
  • Use illegal postal methods to collect a debt
  • Communicate with a consumer by post card about a debt
  • Employ someone to collect a claim who is not licensed to do so

On top of these prohibited actions, Michigan debt collectors must always be clear about who they are when they call, and they can't make the debtor pay for the call. And they must have procedures to stop employees from breaking any of these rules.

Respond to a Michigan Summons for debt collection.

You may be entitled to civil remedies under Michigan law

MI Comp L § 445.257 (2022) states that, if a debt collector violates any of these Michigan debt collection laws, they must provide a consumer with the greater amount between the consumer’s actual damages or $50. Additionally, if the court believes the statutory violation was done willfully, then the judge is authorized to order a debt collector to pay damages to a consumer of three times the amount of the consumer’s actual damages or $150, whichever is greater (also known as “treble damages”).

The Fair Debt Collection Practices Act offers Michigan debtors additional protection

The federal Fair Debt Collection Practices Act (FDCPA) was passed by Congress and signed into law in 1977. It is a landmark piece of legislation governing how debt collectors interact and engage with consumers. For example, pursuant to the FDCPA, a debt collector is legally obligated to do the following:

  • Identify who they are and inform a consumer that the communication is from a debt collector.
  • Send a letter to the consumer’s home address within five days of the first communication identifying the following who they are, who they are collecting on behalf of, the balance owed, the debtor’s right to dispute the debt and demand debt validation.
  • When you demand a debt validation letter, the debt collector is required to immediately cease any further attempts to collect on the debt until such time as the debt collector provides verification to you.

Respond to a debt collector with a Debt Validation Letter.

Along with setting guidelines for what a debt collector must do when engaging with a consumer, the FDCPA also sets further guidelines for what a debt collector CANNOT do under the law, including:

  • Contacting you prior to 8:00 a.m. or after 9:00 p.m.;
  • Contacting your friends, family, and/or neighbors to alert them of the fact that they are attempting to collect on a debt you allegedly owe;
  • Contacting your place of employment, particularly when you advised them that such calls are unacceptable at your place of employment;
  • Using profane language during discussions with you;
  • Threatening to arrest you or to have you criminally prosecuted for the alleged debt;
  • Sending false or inaccurate information to the “big three” credit bureaus (Equifax, TransUnion, and/or Experian); and
  • Using misleading or deceptive representations in their communications when attempting to collect on an alleged debt.

If you believe that a debt collector has violated the FDCPA when trying to collect a debt from you, SoloSuit can help you stand up for your rights in court. You may also be eligible for up to $1,000 per FDCPA violation.

Key takeaways of debt collection laws in Michigan

In Michigan, there are specific laws in place to protect consumers from unfair practices and harassment by debt collectors. Having a clear understanding of these laws can help individuals facing debt collection navigate the process with confidence.

  • Michigan debt collection laws, specifically MI Comp L § 445, define and regulate the practices of debt collectors, stipulating that debt collectors are entities directly or indirectly involved in debt collection, repossession, and related activities, with specific exclusions like regular employees, banks collecting their own claims, and attorneys handling claims on behalf of clients.

  • Debt collectors in Michigan are prohibited from engaging in deceptive and unfair practices like pretending to be lawyers or credit bureaus, misrepresenting legal actions or rights, using physical violence or public shaming, harassing the debtor with calls at inconvenient times, and employing unlicensed individuals for debt collection.

  • Violations of Michigan’s debt collection laws can entitle consumers to civil remedies, with debt collectors providing the greater amount between actual damages or $50, and potential treble damages for willful violations, with judges authorized to order payments of three times the actual damages or $150, whichever is greater.

  • The federal Fair Debt Collection Practices Act (FDCPA) supplements Michigan laws, imposing additional obligations and prohibitions on debt collectors, including mandatory identification and debt validation requirements, restrictions on contacting consumers at certain times or places, and prohibitions against deceptive and abusive practices.

  • Consumers who experience violations of the FDCPA may have legal recourse, potentially being eligible for up to $1,000 per violation, and can seek assistance through services like SoloSuit to assert their rights in court.

If you’ve been sued for a debt in Michigan, respond to the case with SoloSuit’s Debt Answer form and increase your chances of winning.

Settle your debt in Michigan

If you avoid communicating with debt collectors and creditors, they are entitled to pursue legal measures. Nonetheless, not every debt lawsuit is justified. Fortunately, SoloSuit was developed to address this very issue.

SoloSuit can help you respond to a debt lawsuit in Michigan, stand up for your rights, and buy yourself time to work out a debt settlement plan. The surest way to get debt collectors off your back is by paying what you owe. And if you go about this wisely, you can usually settle your debt for less than you originally owed.

In a debt settlement, you offer to pay your creditor a fraction of the total owed, typically around 60% or more of the debt's worth. By providing a one-time payment, the creditor consents to waive any legal actions against you and absolve you of the outstanding balance.

If you decide to settle your obligation, you’ll want to ensure you get the terms of your agreement in writing and pay the creditor before your court date. If you’ve never tried debt settlement before, consider working with a professional organization that will guide you through the process.

To learn more about how to settle a debt in Michigan, check out this video:

SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers until you reach an agreement with the collector. Once an agreement is reached, we’ll help you manage the settlement documentation and transfer your payment to the creditor or debt collector, helping you keep your financial information private and secure.

Read also: How to Settle a Debt in Michigan

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