Debt collection rules and regulations can vary dramatically on a state-by-state basis, and operating in the state of Michigan is certainly no different.
Because it is a state that has been ravaged by unemployment, Michigan lawmakers have made a significant effort to protect their residents from predatory collection tactics. However, licensed and reputable collection agencies are still able to operate in a way that follows the letter of the law and gets the job done at the same time.
Debt & Unemployment in Michigan
The primary economic problem in Michigan is that it has been among the worst states in terms of unemployment for years. That rate peaked at 14.2% in 2009, but with many auto jobs never coming back to cities like Detroit, things aren’t looking all that much better today.
Despite decades of high unemployment, Michigan residents have adjusted to tough times and actually fall below national averages regarding outstanding credit card debt, mortgage debt, and student loan debt.
The Fair Debt Collection Practices Act (FDCPA) is the national law that governs all commercial debt collection. It specifies that commercial debt collectors much conduct themselves in a responsible manner that respects the consumers they are attempting to collect from. And like many states, Michigan lawmakers have passed their own legislation expanding on the FDCPA.
The Collection Practices Act restates all of the consumer protections established by the FDCPA, but it also goes one step further. Where the FDCPA only applies to third-party debt collectors, the Collection Practices Act expands those consumer protections to include anyone attempting to collect a debt from a Michigan resident.
Additional Michigan Legislation
Michigan also has a licensing statute, which requires any commercial debt collector to obtain a license from the state. This license can then be revoked for any debt collectors that fail to respect the rules laid out by the FDCPA and the Collection Practices Act.
Lawmakers in Michigan have also passed the Unlawful Trade Practices Act, Credit Reform Act, and Consumer Protection Act to offer further protection for residents from anyone conducting inappropriate business practices.
Michigan Statute of Limitations
One of the most significant places where we see differences in debt collection laws from state to state is in the statute of limitation on an outstanding debt. In Michigan, a creditor has six years from the date of the last payment to obtain a judgment on an outstanding debt.
However, once a judgment is obtained against a debtor, that statute of limitations no longer applies. The creditor can extend that judgment almost indefinitely as long as they make sure to renew it every ten years.
As we have seen in some other states, the debt collection laws in Michigan are designed to protect consumers from predatory debt collection practices. However, experienced debt collectors who are attempting to recover legitimate debts should have no trouble operating in the states, as long as they are careful to respect the debtors they are attempting to work with.
If you would like to make sure that you respect all of the laws in any state you are attempting to collect from, the best plan is to always partner with a commercial debt collection agency with plenty of experience operating in that state.