If you find yourself mired in debt, it helps to know the Michigan Debt Collection Laws that exist to protect you. Many times, phone calls from debt collectors are more than simply aggravating. Debt collectors have resorted to sleazy tactics to try to collect money they are allegedly owed by consumers. Due to this problem, legislators know about these issues, and they created the federal Fair Debt Collection Practices Act.
Michigan also has statutes that relate to debt collection abuses. Federal Debt Collection laws are better known and used than the Michigan statutes are. There are several reasons for this. The first reason is that private right of action remedies aren't as fruitful under state laws. Statutory damages under federal law are maxed out at of $1,000, whereas Michigan state collection laws are between $50 and $150 depending on whether the debt collector engaged in willful conduct. Another reason is that the federal laws are more detailed and are supported by extensive case law which interprets them. Moreover, federal judges are generally more knowledgeable about the debt collection laws than state judges, and may be more sympathetic to consumers.
Accordingly, most consumers who have Fair Debt Collection Practices cases, and who are represented by attorneys, litigate their cases in federal court. Fair Debt Collection Practices cases may be brought by consumer or by a lawyer. FDCPA cases may be brought as a counter claim in a creditor or debt collector suit against a consumer, or by themselves. Creditors and debt collectors often seek to obtain a "set off" in the lawsuit, which is a reduction in the amount of the damages available to the consumer. This reduction may be valid where the debt collector or creditor can show that the amount owed was valid and owing. However, no matter where the suit is filed and by whom, the vast majority of debt collection cases are resolved with an out-of-court settlement.
Michigan Debt Collection Laws, however, contain some protection which is not afforded under the FDCPA. These laws allow actions against creditors in some cases. Under the federal statutes, there is no relief for actions by creditors, regardless of how deceptive, unfair, or crazy they are. The few exceptions are if the creditor tried to collect on debts using a different name, or if a debt was already in default when the creditor was assigned the debt.
People that are regulated under the Michigan Collection Practices Act are people/companies such as a bank that is state or federally chartered when collecting its own claim, a trust company collecting its own claim, a business licensed by the state under a regulatory act, by which collection activity is regulated, and many others.
Generally, a debt collector cannot commit one or more of the following acts:
- They cannot call before 8 a.m. or after 9 p.m.
- They can contact neighbors or relatives ONLY to get your address or location information
- They cannot call to your place of employment if they know or have been advised you cannot receive calls at work
- They cannot communicate with you in a deceptive or misleading manner, like using attorney stationary or credit bureau if the person is not an attorney or a credit bureau, and if they are, they must tell you that they work for the collection department of a credit bureau.
- They cannot use forms that make them appear to look like the judicial process.
- They cannot use printed forms or seals of a government agency or instrumentality.
- The cannot use forms that can make debtors believe they have official or judicial sanction.
- They cannot make misleading, inaccurate, false, or deceptive statements or claims when communicating with a debtor, or hiding or not revealing why they are communicating with them, when it has to do with a debt.
- They cannot threaten legal action if they do not intent to take legal action.
- They cannot lie about your legal rights.
In sum, this is a partial list of potential violations. There are also other regulations that must be adhered to in order for the creditors to be on the right side of the law in regards to Michigan Debt Collection Laws.