Sarah Edwards | January 31, 2023
Summary: If you’re facing a debt lawsuit, you have 21 days to respond to the lawsuit in Michigan. Even if you plan to settle the debt before court, you should file an Answer to the case to avoid a default judgment. Next, you can use SoloSettle to send a settlement offer to kickstart negotiations. Finally, make sure to get your settlement agreement in writing.
Debt is a fact of life. Over three-fourths of Americans carry debt—from credit card balances to auto loans to mortgages. And if you’re like most Americans, you work hard to pay your debts, but it only takes one setback to let things get out of hand and make you lose control of your finances.
If you cannot keep up with your loan payments, your creditors will call you and send you letters. If you cannot get back on your repayment schedule, they may charge off your debt and sell it to a collection agency or file a debt lawsuit against you.
Creditors and debt collectors who successfully win a debt lawsuit against you will obtain a judgment. A judgment allows them to garnish your wages or freeze your bank account until you fully repay your debt. You’ll lose control of your finances, and a significant portion of your income may go toward debt repayment.
Nobody wants to face a debt lawsuit, but you absolutely do not want a judgment. You can stop a lawsuit from proceeding further by repaying or settling your debt before the court date.
Debt settlement is the best option if full repayment is outside your reach.
In this article, we’ll explore everything you should know about how to settle a debt in Michigan. Let’s get right to it.
If you’re interested in debt settlement, there are three steps you should follow:
Below, we’ll break down each of these steps in detail. Don’t like reading? Check out this video to learn more:
Even if you plan to settle the debt before your court date, you should still respond to the lawsuit. This gives you time to work out a settlement without worrying about a default judgment being ordered against you. Let’s explain.
Your creditor or debt collector will begin the legal process against you by filing a Complaint with the local court in Michigan. You’ll receive a copy of the Complaint along with a Summons to appear for the case.
A Complaint lists the claims your creditor has against you, including the debt amount and any accumulated interest.
In Michigan, you have 21 days to respond to a debt lawsuit before you lose automatically.
Many people don’t realize that the court will grant a default judgment to the creditor or collector if you fail to respond to the Complaint in time. A legal response, known as an Answer, is your defense to the lawsuit.
In your Answer, you must respond to each claim listed in the Complaint and list your affirmative defenses. For example, you might state that there is lack of jurisdiction over the case, improper validation of the obligation, or that the statute of limitations on the debt has already expired.
While you intend to repay the debt in part or in full before the due date, an Answer stops a default judgment against you if your efforts fail. It allows you the chance to defend yourself in court.
You can draft and file an Answer to your debt lawsuit in Michigan with SoloSuit, online, in minutes.
Your next step is to figure out how much you can offer to pay off the debt and how much the creditor or debt collector might accept. Debts settle for a broad range of amounts, so you may have to take a close look at your finances and do some research on your creditor to determine a fair amount to offer.
Calculate how much money you have left over each month after you pay for the basics: food, shelter, utilities, and transportation. Subtract other costs that must be paid like other non-delinquent debt. Add the difference to any savings you have available to pay off this debt. The sum is the amount you have available to pay off the debt.
Amount available to settle = (monthly income – monthly costs) + savings
Debts settle within a broad range of amounts. They can settle for amounts ranging from 1% to over 100% of the total amount of the debt. According to America Fair Credit Council’s Regan Report, the average consumer can reach a debt settlement of 50% when working with a debt settlement company.
That being said, we recommend offering at least 60% of the total value of your debt.
This amount is large enough to show your creditor you’re serious about settling the matter. They’ll weigh a potential settlement against the cost of pursuing a judgment and decide whether it’s more cost-effective to accept a lesser amount in a lump sum.
Consumers who cannot find enough money for a 60% settlement should explain their circumstances. Sometimes creditors and collection agencies will accept less if they understand a consumer is going through a difficult time.
You’ll probably go through several rounds of negotiation before reaching a deal. Don’t accept any agreement that you know you can’t fulfill. If you do and don’t make your payment, the lawsuit will continue—and they’ll probably win.
Here’s an idea of what you could say in your initial offer:
“I see you’re suing me for [$___] for [case number]. I don’t have that kind of money and I don’t agree with the amount. But I do have [$___] that I can pay within 30 days to settle the debt in full. Let me know if you accept.”
Once you reach a debt settlement agreement, make sure to get it in writing before transferring any money. A written contract ensures that you and the creditor or collector understand the terms and conditions of the deal and that you both agree to them.
Your agreement should specify how much you’ll repay, when the payment is due, and how you’ll pay. It should also stipulate that the creditor or collector waives the right to the remaining balance and will take no further collection activity against you.
We recommend that you notarize the agreement. A notarized agreement ensures there is a witness to your signature on the contract and provides an additional legal layer of protection.
Here is a debt settlement agreement example, for your reference, with a preview attached below:
Now that you’re familiar with the debt settlement process, let’s walk through an example of how to settle a debt in Michigan.
Example: Lisa receives a Summons and Complaint in Michigan, notifying her that she is being sued by LVNV Funding for an old credit card debt oft $2,000. Lisa can’t afford to repay the entire debt before her court date, so she decides to attempt debt settlement. She uses SoloSuit to draft and file an Answer into the case before Michigan’s deadline, which is 21 days. Next, she takes a look at her finances to determine how much she can afford to pay off now, which is $1,200 (60% of the debt). She uses SoloSettle to send an initial offer of 40%, or $800. This gives her room to negotiate. LVNV Funding sends a counteroffer, and after a few rounds of negotiating, they agree to settle for 55% of the debt, or $1,100. After SoloSettle transfers Lisa’s payment to LVNV Funding, the case gets dismissed. Lisa saves money, avoids going to court, keeps her financial information safe from collectors, and gives herself a financial restart.
Michigan adheres to the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from taking specific actions, including:
In addition to the FDCPA, Michigan has debt collection rules under MI Comp L § 339.915 (2021). The statute prevents debt collectors from:
Michigan has a statute of limitations that limits the time a debt collector has to pursue a debt lawsuit. Under MI Comp L § 600.5807 (2021), creditors can pursue legal action for written and oral contracts for six years. The MI Comp L § 600.5813 (1996 through Reg Sess) sets a six-year limitation for debts on account.
SoloSettle, powered by SoloSuit, makes negotiating a debt settlement easy by providing a structured process.
You can use our web-app to send and receive offers from collectors. It will draft offers for you and protect you from the potential lies and bullying of debt collectors. Most importantly, SoloSettle makes sure all of the proper legal language is included to protect your rights when communicating with the creditor or debt collector.
When a settlement agreement is reached, SoloSettle manages the settlement agreement documentation for you and protects your sensitive financial information from the collectors, preventing them from over-charging you.
So, what's the best debt settlement company in Michigan? We’ll let you decide on this one. Many consumers prefer SoloSettle over traditional debt settlement companies. Here’s why:
Not convinced? Check out this review from a real SoloSettle customer:
“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
Below are other debt settlement companies you can trust in Michigan:
If you’re ready to settle your debts with a debt collector, you can contact them via phone, email, or letter.
We recommend email since it’s quick and provides a written record of your communication with the collector.
However, you can call them if you’d rather speak directly with the debt collector. Calling might be a good idea if you’d like to explain a job loss, illness, or other extenuating circumstances.
If you decide to cal,l we recommend recording the conversation. Under MI Comp L § 750.539c, you’ll need to obtain consent from your debt collector before beginning the recording.
Keep in mind that debt collectors usually prefer to speak over the phone. They are professional negotiators, and they know how to manipulate and intimidate consumers. This is why it’s important to get proof of any phone conversations you have with collectors.
Do you have further questions about debt settlement in Michigan? Here are a few of the top questions we hear.
We recommend starting the debt settlement process with an offer of at least 60%. That’s enough to show your creditor you’re ready to settle, and they’ll likely be more willing to accept it than a stream of monthly payments. If you can’t provide that much, offer what you can.
The statute of limitations for debts is six years in Michigan. After that period, your creditors lose the right to obtain a judgment against you. However, they can still report your account adversely to the credit reporting bureaus and may continue to call or write to you.
It’s better to pay off your debts completely. However, settling your debt can help you avoid a potential judgment if you're facing a difficult financial situation. Once you settle the obligation, you’ll be free from further collection activity.
SoloSuit has many articles concerning debt settlement, debt relief, and Michigan collections laws. Here are a few you can review.
A debt lawsuit is not the end of the world. Learn how debt settlement works and begin the process with your creditor. Start by filing an Answer, then start your negotiations. Once you have a deal, make sure to get it in writing.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather