Debt collection laws in Michigan

Federal debt collection laws

Some debt collection laws protect consumers on a federal level. The most important federal debt collection law is the Fair Debt Collection Practices Act (FDCPA), which affords all Americans certain rights when their unpaid debts have made them subject to collection activities.

This act prohibits debt collectors from using deceptive or abusive debt collection practices, such as contacting you at odd hours, calling you repeatedly or making false threats regarding legal actions they plan to take. Debt collectors are also barred from revealing the existence of unpaid debts to other parties, both on social media and through direct forms of communication.

According to the Consumer Financial Protection Bureau (CFPB), if you have legal representation already in place, the FDCPA requires debt collectors to contact your attorney instead of reaching out to you personally.

The FDCPA also lets you stop all contact with debt collectors by informing them in writing that you do not want to receive communications any longer. If the debt collector continues its communications, you can sue them under the FDCPA and get your legal fees paid, plus damages.

» MORE: How to handle bill collectors

Michigan debt collection laws

The state of Michigan also has its own laws that regulate the industry and protect residents from abusive debt-collection practices. Here’s an overview of some specific debt collection laws that only apply in Michigan.

Debt collection practices

State-based consumer protections in Michigan prohibit debt collectors from engaging in the following practices:

• Communicating in a misleading or deceptive manner
• Using communications that appear to be part of the judicial process
• Sending communications that look like they're from a government agency
• Making inaccurate, misleading or deceptive statements or claims to collect a debt
• Misrepresenting the legal status of an action being taken and the legal rights of you or the creditor, such as by saying that not repaying a debt will lead to your arrest or imprisonment
• Misrepresenting that your property is available for seizure, garnishment or sale to third parties
• Communicating with you without disclosing their identity as a debt collector
• Communicating directly with you if you have legal representation (with some exceptions)
• Telling your employer about your unpaid debts without permission
• Pretending to be a law enforcement officer or hiring someone impersonating one to attempt to collect on a debt
• Threatening or using physical violence
• Publishing or threatening to publish information on unpaid debts
• Calling during odd hours or repeatedly to collect on a debt
• Using profane or obscene language
• Communicating about your unpaid debts via a postcard
• Employing nonlicensed debt collectors

Also be aware that the state of Michigan sets specific hours for debt collection calls and other communications. According to the Michigan legislature, attempts to contact a debtor must be made from 8 a.m. to 9 p.m. unless the debtor agrees in writing to communications at other times.

Statute of limitations

In the state of Michigan, most oral and written contracts automatically have a six-year statute of limitations when it comes to the collection of debts. However, this timeline doesn't actually begin until someone is late on a bill or misses a payment. Also note that making a payment on the debt after the timeline begins can result in the "clock" starting over.

After six years, debt collectors in Michigan can no longer take legal action against you.

Licensing and registration

Debt collectors in Michigan cannot legally collect a claim unless they are licensed under article 9 of Act No. 299 of the Public Acts of 1980.

Consumer rights

In Michigan, consumers have the right to limit debt collections in several important ways. For example, Michigan residents can notify debt collectors that they do not want to be contacted at work either orally or in writing, and debt collectors are legally required to comply.

Also note that Michigan residents can rely on federal protections under the FDCPA to stop all communications from debt collectors. The request must be made in writing, and debt collectors are legally required to comply and can be sued under the FDCPA if they do not.

Just remember that ending communication you receive from debt collectors doesn't make the debt go away, nor does it limit other consequences of nonpayment, including damage to your credit score, additional interest charges and mounting fees that can make the debt worse.

» MORE: How to get out of debt

Examples of debt collection activities in Michigan

According to government data from Michigan courts, more than 50% of debt collection cases brought to court in the state originate from five large national companies, and the average claim amount is just $1,600.

Well over half (68%) of debt collection cases in the state end in a default judgment, meaning the plaintiff (in this case, the company suing) automatically wins. This is partly due to the fact that the state of Michigan does not require debt collection claims to be proven even if the defendant (in this case, the debtor) doesn't show up in court or engage in the lawsuit.

Unfortunately, collections activities in Michigan are disproportionately targeted at low-income and Black neighborhoods. Data from the state shows that Black residents of the state are twice as likely to have a debt collection lawsuit filed against them.

Three out of four debt collection lawsuits ended with the seizure of the debtor's assets, wages, state tax returns or all of the above in 2022.

Bottom line

The FDCPA provides federal protections that limit collection activities and keep debt collectors in check, yet the state of Michigan adds additional rules that set boundaries for the times debt collectors can call and limit what they can and cannot say.

That said, none of these protections can help you escape the debts you owe completely or the other consequences of nonpayment that can apply. If you feel overwhelmed with your debts and need help figuring out your next best steps, consider contacting a debt collection attorney or a nonprofit credit counselor.