What does the law say about not paying your debt in Michigan?

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When it comes to their finances, Michigan residents have significant underlying debt problems.

On the surface, issue areas are rarely apparent since Michigan keeps debt levels lower than the national average

Michigan consumers and debt

One of the key reasons is that many Michigan consumers use bankruptcy to discharge their debts, lowering the state’s average debt levels.

Michigan law is quite extensive, going far beyond the federal government so it can protect consumers more than other states.

Michigan’s credit scores

The average credit score for Michigan is 653, which is just shy of the national average of 661.

The FICO scoring system ranges from 300 to 850, with higher numbers indicating a higher chance of paying debts on time.

Other reasons, such as high bankruptcy rates and frequent late payments, are more common in Michigan.

Is there a Michigan statute of limitations debt?

The statute of limitations for unpaid bills in Michigan is six years, regardless of the type of debt.

The debt can be personal loans, household debts, auto loans, credit card debt, payday loans, medical bills, medical emergencies, and most secured and unsecured debts.

What happens after six years of consumer debt?

The state law in Michigan implies that creditors cannot take legal action against you if a debt has been outstanding for more than six years or hasn’t been paid for more than six years.

Creditors and debt collectors are then prohibited to collect debts owed to them, but you would need to seek a court order to enforce the statute of limitations if the creditor does not comply.

What is debt collection in Michigan?

Certain types of income and property are considered exempt from debt collection under state and federal law. A creditor or debt collector cannot make you use exempt income or property to pay outstanding debt.

Debt collection may include several different types, but certain benefits cannot be collected. Amongst these are Public Assistance (PA), Social Security Income(SSI), and Social Security Disability.

Workers’ compensation, unemployment insurance, and VA benefits are also excluded.

You can work with an attorney and hire legal services (which usually include a free consultation) so debt collectors stop contacting you and you stop receiving such calls or certified mail which can even be illegal.

The Collection Practices Act

The Collection Practices Act is Michigan’s equivalent of the federal law known as the Fair Debt Collection Practices Act (FDCPA).

The state’s consumer protection statute, like the FDCPA, prohibits harassment, fraudulent, incorrect, and false statements or conduct to collect a debt.

Michigan limitations on debt collection

The limitations on debt collection in Michigan forbid debt collectors from making threats or using shaming tactics to collect debts.

The limitations Michigan faces also prohibit a debt collector from engaging in harassing, abusive, or otherwise detrimental ways to collect a debt.

Differences in federal law and state law

The most significant difference between the Michigan Collection Practices Act and the federal FDCPA is that it does not apply to credit repair.

The state’s debt collection law applies directly to lenders and creditors, whereas the national regulation only applies to outside debt collectors.

What you have to know about debt collectors in Michigan

The Fair Debt Collection Practices Act (FDCPA) classifies a debt collector as someone who regularly collects, or attempts to collect, consumer debts for another person or business, or refers to himself/herself as anything other than his/her own when collecting his/ her consumer debts.

According to numerous laws in Michigan, your creditor has up to six years from the date of your previous payment to attempt to collect a debt.

What is a judgment?

A judgment is a final order from a Court of Law that allows your creditor to pursue collections or wage garnishments as long as they re-open the judgment every ten years.

If your creditor obtains a judgment or default judgment and keeps it active by renewing it, the statute of limitations may not apply.

Third parties hired by lenders for debt collections on their behalf are known as third-party debt collectors.

Even if a debt has gone dormant for years, it may be collected again many years later or sold to a debt collector down the road.

When you sell a debt to a collection agency, the collection agency is likely to resume aggressive collections efforts to recoup its expenses.

How long can a debt collector in Michigan pursue a debt?

In the state of Michigan, a lot of consumers are struggling with outstanding debt.

When a consumer debt goes unaddressed for an extended period, creditors may file a lawsuit against the customer to get a judgment.

A judgment allows you to collect money against the debtor’s (i.e., the person who owes the debt) earnings, through methods such as wage garnishments or bank account seizures.

A lawsuit will be filed by creditors who are owed money if they claim you breached your obligations under your contracts.

In Michigan, the statute of limitations for a breach of contract is six years.

If debt collectors are harassing you, you can contact the Michigan Attorney General’s office at 877-765-8388 to make a complaint.

Another way to protect yourself from scams is to report them to the Federal Trade Commission. You can do this by going to their website or by calling them toll-free at 1-877-382-4357.

If you feel that your consumer protection rights are being violated by creditors, then you are recommended to document the contacts made by the creditor, including the person who contacted you, which company they are from, the time of the correspondence, and what was said by the debt collector.  With this information, you may be able to file a civil complaint against the creditor for violating both the federal and Michigan rules and get a judgment against them.

How can a lawyer help me get out of debt?

Both in the case of oral contracts and written contracts, it is better to hire professional legal services so you have an attorney on your side explaining the limitations and options until you are no longer legally obligated to pay.

The creditor wins the case and is awarded a judgment once that occurs. Many consumers opt to defend themselves against this.

An attorney’s legal services can help you figure out how to defend yourself against the creditor or assist you in working out a resolution with the creditor that makes sense for you.  Once you have an attorney involved the creditor understands that you may now be a viable bankruptcy candidate and may be more willing to work with you before you file bankruptcy. 

Benefits of working with an attorney

An attorney will be able to advise you of all your options to make the best decision for you and create a plan of action to get the debt relief you are seeking.

A debtor must be informed that judgments might be renewed by the collector on behalf of the debtor for an additional 10 years.

Both the Consumer Financial Protection Bureau and your lawyer are experts at finding ways to protect you as a consumer.

A lawyer can provide a precise amount of information to credit reporting agencies. They are not permitted to harass you, but they may attempt to get money from you.

Debt consolidation loans are one of the most popular methods to combine consumer debts in Michigan to get you a fresh start.

Debt consolidation loans are offered to help many people pay off their debts more quickly over time by lowering their payments and interest rates.

Benefits of consolidating loans

These loans give people a sense of security by lowering their debt levels. They also alleviate the worry of losing their house or car because of unmanageable auto loans, credit card bills, or medical expenses.

This consolidation can be the best course to cut your monthly payments and interest rates in a new contract.

Remember that if you have a legal contract with a creditor to whom you owe money in Michigan, you are required to pay it.

Learn how to deal with unprofessional debt collectors and your rights as a debtor.

The Babi Legal Group can assist you in finding better ways to deal with debt, credit, and payment.

 

Can an attorney stop foreclosure in Michigan?

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When you’re facing a foreclosure, it may be difficult to know how to proceed and what options are available.

Foreclosure is the process in which a lender forecloses on a property after someone fails to pay their loan.

How does foreclosure begin in Michigan?

In Michigan, most foreclosures are done without the need for court involvement, This is known as foreclosure by advertisement.
When your lender informs you that it will foreclose upon your property due to your delinquency in mortgage payments, a foreclosure process begins. The entity that oversees your mortgage is known as your lender or the mortgage servicer. The mortgage servicer is different than the company that owns the mortgage note.

Prevent foreclosure through timely mortgage payments

To prevent any foreclosure case, the first thing is to never be behind on your mortgage payments.

When you sign for a mortgage loan in Michigan, you agree to pay your monthly mortgage payments on time.

Nevertheless, many times in life there are situations where you may be facing foreclosure because we go through emergencies, we lose our jobs, or life circumstances change.

As expert foreclosure defense attorneys, we are ready to offer legal advice to stop foreclosure. In this article, we are discussing some options.

Nevertheless, the best thing you can do to stop a foreclosure is to review your case with an experienced attorney.

The Babi Legal Group has decades of experience in stopping the foreclosure process in its tracks and providing you with free foreclosure prevention analysis.

Use a strategic mortgage default to get mortgage relief

 

In an attorney-client relationship, sometimes a lawyer can propose a strategic default to propose to the mortgage company modified mortgage terms through a loan modification which can reduce the monthly payment, reduce the interest rate and make your mortgage current.

This is when a borrower decides to stop making payments on mortgage debt while still having the financial capacity to do so.

Before you stop paying…

It’s critical to speak with a qualified professional before missing any payments, which can harm your credit.

An experienced lawyer usually provides free consultations to discuss your finances and the best way to achieve your long-term objectives, including addressing other debts and financial problems.

How to get a loan modification in Michigan

A loan modification is an agreement between the mortgage servicer and the homeowner, where the mortgage company can through a new mortgage agreement reduce your monthly payment and the interest rate to make your mortgage payment more affordable based upon your current income analysis. 

The mortgage company will also in some cases reduce the principal mortgage balance. This makes it easier for the person to afford their monthly payments.

If you fall behind on your payments, you may be able to add the missed payments to the end of the loan, so you will not be required to repay it until your loan matures.

To apply for a mortgage loan modification to stop foreclosure, you need to contact your loan servicer at least 30 days before the foreclosure sale date. They will ask you for information about your income, expenses, and financial condition.

You will need to provide some documents to support your application. The process may seem difficult, but having a foreclosure defense lawyer on your side can make the difference between being approved or denied for a final modification.

Most law firms offer a free evaluation of your case and offer a realistic plan to assist you in obtaining a final loan modification.

A foreclosure attorney that helps you face a Michigan foreclosure

You may seek assistance from a housing counselor if you are facing foreclosure. A free housing counselor can assist you.

You should never pay a charge for lender assistance. Use a certified counselor from the Michigan State Housing Development Authority (MSHDA) or the United States Department of Housing and Urban Development (HUD).

Expert attorneys

You can also go to expert foreclosure lawyers. A law firm that is experienced in bankruptcy has a deep knowledge of the court process, the loan documents, and the mortgage litigation that has to be followed, all in a confidential relationship. They also can stop a foreclosure in its tracks by filing a bankruptcy petition before the foreclosure sale date.

In Michigan, how can I stop foreclosure? 

There are several ways to stop a foreclosure and each possibility depends on the specific details surrounding your reasons for why you are facing foreclosure.

Here’s a list of foreclosure prevention methods:

  • Bankruptcy, either chapter 7 or chapter 13.
  • Begin loss mitigation with your mortgage servicer at least 30 days before any foreclosure sale date. This would include a loan modification; short sale; or deed instead of foreclosure.
  • Filing of a wrongful foreclosure complaint in the County Circuit Court.
  • Paying off the delinquent mortgage payments that have caused the foreclosure. 
  • Refinancing the loan before the foreclosure sale.

Once a foreclosure begins…

When you miss a payment or are unable to modify your loan, your lender can initiate the foreclosure process.

It can accomplish a foreclosure in Michigan by either advertisement or through the court process.

A foreclosure by advertisement is the announcement of the foreclosure by publishing a notice of foreclosure in a local newspaper and affixing the notice of foreclosure to your property. 

This process allows the mortgage company to streamline the foreclosure process since they do not need to process the foreclosure through the court system.

Can a foreclosure attorney stop the Sheriff’s sale?

The Sheriff’s Sale Notice is published for at least four weeks. To avoid foreclosure, a law firm can assist you with a variety of things during this time.

After the Sheriff’s sale date has been established, you can find foreclosure lawyers that can help you avoid foreclosure by selling your home for fair market value before the foreclosure sale date.

You also have the option to refinance your house. Before the foreclosure sale ends, you can stop the foreclosure by seeking a loan modification. However, it is recommended that you request modification assistance at least 30 days before the foreclosure sale date.

If you decide to declare bankruptcy, then the bankruptcy automatic stay will stop and cancel the foreclosure if you file the bankruptcy case before the foreclosure sale date.  Even while you are in bankruptcy, with the right legal counsel you can also request a mortgage modification that the bankruptcy court will oversee.

How to find good Michigan foreclosure attorneys?

Be careful when choosing foreclosure attorneys. You do not want to go to a debt relief firm, which will have very limited options.

Make sure the law firm you retain is experienced in both pre and post-foreclosure assistance. Ask about their knowledge of the federal law, the United States Bankruptcy Code as well as the Michigan one, since some laws are state-specific.

With the right law firm, you may even be able to rescind a foreclosure or realize any post-foreclosure equity you have in the property during your redemption period.  In Michigan, you are entitled to a 6 month or 1 year redemption period, although in most cases, it’s a 6-month redemption.  The redemption period is valuable time you have to seek last-minute options that could save your property or put cash in your pocket.

Do not trust all websites

Try to avoid websites and other automated technology that offer paid attorney advertising.

Do not share any sensitive or confidential information as well as your case details, contact info, or email with third parties.