Michigan's Statute of Limitations on Collecting Debt

No law in Michigan bars debt collectors from collecting voluntary payments from consumers -- regardless of the debt's age. Michigan, however, possesses two statutes of limitation that regulate the amount of time creditors have to legally enforce consumer debts. One statute of limitation applies to general consumer debt while the other applies to lawsuit enforcement.

Types

• The statute of limitations for general consumer debt in Michigan provides creditors with a limited amount of time in which to file a lawsuit against a consumer for debts he has failed to pay. The statute of limitations for lawsuit enforcement, however, limits the amount of time a creditor has to enforce a court judgment gained through a successful lawsuit. The Michigan State Court Administrative Office notes that Michigan allows creditors to enforce their judgments via the seizure of wages or property.

Time Frame

• A creditor without a judgment has four years in which to either successfully collect the debt or file a lawsuit against the debtor. If it fails to take legal action within Michigan's four-year statute of limitations for debt collection, the creditor may still attempt to collect the debt, but, should he sue, the debtor can use the expired statute as a legal defense.

  A creditor who has previously won a lawsuit against a debtor has 10 years in which to collect the judgment from the debtor. If collection efforts prove unsuccessful, the creditor may request that the court renew its judgment for a subsequent 10-year period.

Facts

• There is no statute of limitations in Michigan concerning how long a debt or judgment may remain on an individual's credit report. This particular statute of limitations, known as a debt's "credit reporting period," is set by the Fair Credit Reporting Act and applies to all states. The FCRA stipulates that an unpaid debt may remain a part of a debtor's credit history for 7.5 years from the date the consumer originally defaulted on payments to the creditor. Should the creditor obtain a judgment, the judgment will appear on his credit report for 7 years from the date the judgment was awarded.

Misconceptions

• While an expired statute of limitations serves as a valid consumer defense in a Michigan courtroom, it doesn't protect debtors automatically. If a creditor files a lawsuit against a debtor after the statute of limitations for debt collection expires, the consumer must respond and utilize the expired statute as a defense. If she does not, the court will award the creditor a judgment against her.

Warning

• The statute of limitations begins on the date the debtor made his last payment on the account. Because of this, making a payment to the creditor, no matter how small, restarts the clock on Michigan's four-year collection statute. Thus, a consumer can place herself at risk of a lawsuit on an out-of-statute debt merely by sending a payment to the creditor.