Wednesday
Mar032010
Collection Lawsuits in Michigan (Part I)
Wednesday, March 3, 2010 at 8:46PM The creditors have been calling, but no matter how much you pay it's not enough to stop them. You start ignoring the calls and the threatening letters. What happens next?
The creditor will sue you to get a money judgment. Why? Because a judgment is good for ten years and Michigan law gives the holder of a money judgment a set of tools to force you to pay. These include bank account and paycheck garnishments, levies, creditor exams, and liens. Sometimes a creditor will sue you before they even entertain a settlement offer.
But don't panic if a creditor sues you. The creditor cannot use these tools until a judgment is obtained. To get a judgment, the creditor must file and serve you with the complaint. If you're served by mailed, you then have 28 days to answer. After that, the creditor must apply for a default judgment, and then wait another 21 days for it to become effective. If you answer the complaint, you can buy more time as the court will set the matter for a pretrial.
That said, don't wait for the creditor to get a judgment. A timely bankruptcy filing will halt or prevent litigation. It can discharge your debt before the garnishments start or the liens get placed on property. It can even get back some of your recent garnishments and strip off liens, but this can result in a more complicated and expensive bankruptcy filing.
In my next post, I'll address some of the tools creditors use once they obtain their judgments