Michigan's statute of limitations on debt—what you need to know
If you're facing debt collectors in Michigan, it's crucial to understand the statute of limitations so you can protect your rights.
The timeline for collecting on debts varies depending on the type. Most fall under a six-year statute of limitations in Michigan. But credit card debt, for example, may have a different timeframe.
Let's break down what Michiganians need to know to take control of debt situations.
Michigan's statute of limitations varies by debt type
In the Great Lake State, creditors typically have six years to collect debts. This includes getting a court judgment against you.
The six-year statute of limitations applies to common debts such as personal loans, medical bills, and utility bills. But other debt types follow different time limits, including:
- Credit card debt—The statute of limitations is four years in Michigan. This means issuers have four years from your last payment to sue you.
- Auto loans—Six years from the date of repossession to take legal action
- Mortgages—The foreclosure statute of limitations is six years
- Federal student loans—No statute of limitations unless they're in default. Then it's six years.
- Private student loans—Variable, but often six years. Depends on loan terms.
The date of your last payment is crucial. The clock starts ticking from there. Say you default on a credit card with a $5,000 balance. You make a $100 payment toward it three years later. That payment restarts the four-year clock.
So, put simply: no payment = no restart of the statute of limitations.
Why statutes of limitation matter in Michigan
Michigan faces high volumes of debt collection lawsuits.
In 2017 alone, more than 156,000 debt collection cases flooded Michigan's district courts. And more than 75% of these cases came from national debt buyers and banks.
Often, the statute of limitations has expired on the debts collectors seek. Consumers aren't aware and fail to claim these protections. Some disreputable collectors even pursue zombie debts beyond the statutes.
That's why understanding your rights is so important. With the statute of limitations, collectors can still try to collect on a debt. But suing you becomes illegal once the time is up.
The burden falls on the consumer to claim these protections. As you might imagine, collectors are not likely to highlight that the clock has run out.
How Michigan statutes are established
Wondering where Michigan's statute of limitations comes from? They're part of the state's legislation.
The Michigan Compiled Laws lay out statutes of limitations in Section 600.5809. It establishes the six-year window for debts unless stated otherwise.
This section also notes that absent payments restart the clock. It covers property liens related to expired debt judgments.
Beyond these laws, individual contract terms also play a role. For example, the statute of limitations for student loans or auto financing may depend partly on what the contract states.
Using statutes of limitation to your advantage
If you're facing collectors on an old, defaulted debt in Michigan, the statute of limitations can work in your favor. But you'll need to claim those protections.
How can you do this exactly? Here are some tips:
- Review the statute of limitations—Determine what timeframe applies to the debt based on its type and your last payment. This gives you an idea of whether it's expired.
- Don't make payments—As mentioned, any payments restart the clock. So don't make partial payments in the hope that collectors will be sympathetic. Stand your ground.
- Dispute the debt—You can dispute expired debts with the credit bureaus to try to remove them from your credit reports. Include the statute of limitations as grounds for removal.
- Request verification from collectors—If contacted, request written verification of the debt. Collectors may be unable to provide it if the statute expires.
- Highlight the expiration—Let collectors know the statute of limitations is up, and you will not make any payment or acknowledge the debt. State this clearly in writing.
- Seek legal help—If wrongly sued, get legal aid immediately to help dismiss the case based on the statute. Don't ignore any court notice
How debt relief factors in
Stuck struggling with unmanageable debts in Michigan still within the statute of limitations? Debt relief programs can help if your income qualifies.
- Credit counseling—Get a customized debt repayment plan through a non-profit credit counseling agency. Make one monthly payment and avoid interest charges.
- Debt settlement—Debt settlement companies negotiate with creditors to lower balances.
- Debt consolidation loans—Combine multiple balances into a fixed lower-rate loan for one payment. Doing this can also extend your repayment timeline.
- Bankruptcy—Wipe out eligible debts or restructure payment through Chapter 7 or 13 bankruptcy. Each has pros and cons.
The clock typically pauses during active enrollment in these programs. Just be sure to vet providers thoroughly and understand the terms. Avoid any asked for upfront fees or overnight debt relief promises.
Relief programs don't erase debts exceeding the statute of limitations. But they can resolve those within the window more gracefully to avoid litigation.
Arm yourself with debt collection law knowledge
Beyond statutes of limitation, countless other consumer protections exist in Michigan:
- Creditors can't contact you before 8:00 a.m. or after 9:00 p.m. without permission
- Collectors must honor written requests to cease communication
- Harassing, threatening, or abusive collection practices are prohibited
- Wage garnishments face restrictions to protect net income
- Debt buyers must provide detailed account statements validating debts if requested
- Selling or transferring repossessed vehicles and foreclosed homes involves consumer notice requirements
- Fixed interest rates on student loans prior to January 1, 1981, were capped at seven percent
Learn your rights under state and federal collections laws. Don't hesitate to seek legal aid if you feel violations occurred.
The statute of limitations presents just one important shield - but the more defenses you have in your toolbox, the better.
Mind the statutes no matter your debt situations
Managing debt while balancing Michigan's cost of living is tough. Maybe you're young and just starting to build credit. Perhaps you're facing collections from a past hardship. Or you have student loans dragging despite a steady income.
Whatever your situation, keep statutes of limitation on your radar. They dictate how long collectors can legally pursue you for different debts.
Understanding these timeframes is half the battle. Exercise your rights. And explore relief options if needed to resolve debts within the legal limits.
Knowledge gives you power when it comes to managing credit and collections disputes in Michigan. Stay vigilant to protect yourself and your financial opportunities.