Ben Franklin famously wrote, “Nothing is certain in this world but death and taxes.” Had Franklin written today, there would have been one more surefire addition to his inevitable list. it’s a loan.
In Franklin’s time, debt was something only the rich could afford. But now, according to the latest statistics, America’s family owes him nearly $1 trillion in credit card debt. That’s more than $6,500 for the average family, not including gas and electric company payments, car loans, or medical bills.
Not surprisingly, as consumer debt increases, more and more people will be unable to pay those debts. More than a quarter of Michigan residents with credit reports say they have at least one We are collecting debts. And just as the family is flooded with debt, courts in Michigan have been flooded with her more than 200,000 debt collection cases in 2019. This makes up 37% of all civil cases filed in district court, second only to traffic lawsuits.
This rising trend in consumer debt has prompted Michigan’s Everyone’s Judiciary Commission to review the numbers to better understand the state’s debt collection and determine whether systemic changes can improve the process. That’s why we decided to dig deeper. Comprehensive report finds more than half of debt collection cases governing civil courts in Michigan, his five national companies buying credit his card, medical and utility debt for $1 from original creditors revealed that it was filed by
Of particular interest to the Commission, the researchers found that creditors are most often represented by lawyers, whereas consumers in debt collection cases are rarely represented. This usually results in a default judgment against the debtor. However, if both sides have legal representation, litigation is more likely to be dismissed or settled than default judgment, which is often initiated without meaningful hearings to test the validity of claims. Clearly, this imbalance of representation makes debt collection a matter of access to justice within the commission’s mandate.
With technical assistance from The Pew Charitable Trusts, January Advisors, and the Joyce Foundation, the Commission’s Debt Collection Working Group seeks input from a wide range of stakeholder groups, including attorneys, legal aid officers, advocates, and court staff. Asked and informed of its recommendation. Armed with this information, the report details a roadmap for justice to innovate data-driven and improve debt collection processes, making Michigan a national leader in equity and access.
As former trial court judges and legal aid attorneys, we understand how difficult it is for unrepresented litigants to navigate court rules and procedures. For parties without lawyers, the complexity of the system is an obstacle to the fair administration of justice. And while it’s expensive and impractical to hire an attorney for every consumer, this groundbreaking report will improve the way trial courts handle debt collection cases so people can get more out of the process. is easier to navigate, resulting in a fairer, more efficient, and more consistent experience.
Key findings of the report include:
- Michigan consumers are usually on their own without lawyers to navigate these cases in court. Defendants are being sued with average claims of $1,600. While less than 0.5% of her Michigan defendants in debt collection cases have formal legal representation, the opposite is true for the companies filing the lawsuits. A total of 96% of plaintiffs in debt collection cases are represented by attorneys.
- Most Michigan debt collection cases (68%) are decided in favor of the debt collector without a trial before a judge or jury.
- Three-quarters of debt collection cases end in court decisions authorizing seizure of a debtor’s assets, wages, and even state tax returns. Such seizures are rare in other states, but are common throughout Michigan.
- Consumers living in majority-black communities are twice as likely to be sued for debt collection and more likely to be defaulted or foreclosed than consumers in majority-white neighborhoods. Become.
Moreover, Michigan’s court rules and procedures have failed to adapt as debt collection cases have increased. The Commission’s report therefore recommends:
- Change court rules to ensure that consumers are notified of lawsuits brought against them.
- Increase the amount of information required in a debt collection complaint to ensure that there is sufficient evidence to support a judgment of default.
- Create court forms that are easy for consumers to understand and use.
- Developing alternatives to litigation to enable creditors, consumers and courts to resolve debt collection cases fairly.
The Michigan Supreme Court will consider these recommendations and take action to pursue the Commission’s goal of a civil justice system accessible to all. In addition, other departments of government can take steps to address access to justice issues identified in the report. We may not be able to do anything about death or taxes, but together we can do something about access to justice in debt collection cases.
Brian Zahra and Angela Tripp are Chairs and Vice Chairs of the Michigan Justice for All Commission. Zara is a Michigan Supreme Court Justice.
