Debt Collection
Legal Action to Collect a Debt
To take legal action to collect a debt, the creditor (the person or company owed money) files a lawsuit against the debtor (the person who owes the money). Once a debt collection lawsuit is filed with the court, the creditor must give the debtor notice of the lawsuit (service). This is most often by personal delivery or by mail but it can be by other ways.
If you get a Summons and Complaint or other notice of a lawsuit or hearing, it is important to do something quickly. If you do not understand what you received, get help. You need to file a written response (Answer) with the court to protect your rights. If you do not file an Answer by the deadline, you can be held in default. If you are held in default, may not be able to contest the debt or participate in the case against you. The creditor can then get a court order requiring you to pay the debt plus fees and costs (Default Judgment).
Once there is a court order for you to pay (Default Judgment or Money Judgment), the creditor can collect that money by having money taken from your pay or in other ways such as taking money from your bank accounts, taking your tax refund (Garnishments) or using a legal process to take and sell your property.
Debt Collection by Third Party
It is now very common for credit card companies or other creditors to sell bundles of debt to other companies. This means that if you are sued for a debt you may not recognize the name of the company suing you.
When debts are transferred in this way, it is not uncommon for mistakes to be made about who owes the debt or the amount of the debt. It is also possible that the company that bought the debt cannot prove in court that you are the right person or that you owe the amount they claim.
If you think there is a mistake, you need to make that argument to the court by filing a writtenresponse with the court (Answer) and insisting that creditor produce the documents that show you owe the debt and that you owe the amount they claim you do. If you do nothing or do not respond in time, you risk losing the case and having the court order you to pay the debt plus interest, fees and costs (Default Judgment or Money Judgment) even if there has been a mistake.
For Informational Purposes Only: This summary is provided for basic informational purposes only. It is not legal advice. For legal advice about your situation, you must talk to a lawyer.
Additional Resources
- Michigan Legal Help offers articles and forms creation at no cost.
- The Grand Rapids Bar Association Lawyer Referral and Information Service offers a 30 minute conference with a lawyer for $25. Call (616) 855-0273 for an appointment.
- Visit or call the Legal Assistance Center.