Debt Collection Lawsuits ‘Flooding’ Courts in Michigan: Report

A commission organized by the Michigan Supreme Court has released a report summarizing that debt collection lawsuits are “dominating” the docket in Michigan’s state court — coming second only to traffic violations — and that 10 plaintiffs are responsible for nearly 75% of all collection lawsuits filed in the state.

A copy of the report, released today by the Michigan Justice for All Commission, can be accessed by clicking here.

Along with publishing the findings of its research into the volume of debt collection lawsuits being filed in the state, the report also makes several recommendations, including:

  • Modernizing serving of process rules to help ensure that consumers receive notice of the lawsuit filed against them
  • Increasing the amount of information to be included in the complaint to help ensure that the
    plaintiff has provided sufficient evidence to support a default judgment
  • Creating court documents and forms that consumers can easily understand and use
  • Improving our understanding of debt collection in Michigan through a more optimized use of
    court records
  • Engaging with consumers who have faced debt collection litigation to understand the barriers
    they encounter in court processes
  • Developing pilot projects to find alternatives to litigation that help creditors, consumers, and
    courts

Default judgments are entered in 70% of all collection lawsuits filed in the state, and garnishments are sought in 78% of cases, according to the report. The report also notes that the filing rate of lawsuits against individuals living in communities where the majority of residents are African-American is two-to-three times higher than those living in communities where the majority of people are White, and while the number of lawsuits filed against individuals living in majority White communities decreases as you move up the income ladder, the same is not true for communities where the majority of residents are African-American.

The commission included several representatives from collection law firms, as well as consumer advocates, academics, and representatives from the state’s Attorney General’s office.

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