In the state of Michigan, there is a statute of limitations on debt. But many debt collectors and creditors seem to forget about this or illegally pursue old debts knowingly.
Official Statute of Limitation on Debt in Michigan
The statute of limitations on debt in Michigan varies depending on the type of debt, however, the statute of limitations for customer debt in Michigan is six years. This is applicable to all four types of contracts including:
Written contracts (signed documents)
Oral contracts (verbal agreements)
Open-ended accounts (credit cards)
Promissory notes
Understanding the Statute of Limitations on Debt
There is a lot of confusion regarding the statute of limitations. It is important to understand that the statute doesn’t necessarily stop a person from trying to collect his or her debt from you. It just means they can’t pursue the existing debt through a court process.
After the statute of limitations has lapsed, creditors and debt collectors can still pursue the debt in the following ways:
Send you a correspondence
Contact you through a phone call
Give your information to credit reporting agencies
In other words, they are legally barred from harassing you but they are still allowed to try and collect their debts.
The lifecycle of a debt
When you fail to pay a debt as agreed, the creditor or debt collector will attempt to sue you for the amount owed. They will start by contacting you and if you pay some amount, the terms are renewed.
But if you don’t make any payment, the lender or debt collector will try to seek a court judgment. This can result in garnished wages. In Michigan, the statute of limitations is six years, meaning, the creditor generally has up to six years to file the lawsuit and recover a debt.
Judgments on debt
If the debt collector manages to obtain a court judgment, then the statute of limitations resets. They will have up to 10 years to collect. This can be through wage garnishing or any other way. Within the 10-year duration, the lender can decide to renew the judgment and again increase the timeframe to collect the debt from you.
Time-barred debts
A time-barred debt is a debt that has exceeded the statute of limitations. This can be your legal standing in case a collector tries to sue you after the statute of limitation has passed.
What you can do
Avoid debts whose contractual terms are unclear
Don’t ignore letters from the court
Avoid speaking to the debt collector without your attorney
Protect Yourself from Creditor Harassment
At Moran Law, we are experienced in protecting you against creditor harassment. Michigan state and federal laws can protect debt collection tactics. If you are being harassed with telephone calls or threatened with legal action, our Michigan bankruptcy attorneys can help.
