Creditor Harassment in Michigan
Under the law, creditors should ensure ethical conduct in debt collection. However, sometimes their actions fall under harassment. If a creditor employs illegal, abusive, or unfair tactics to recover unpaid debts, you should know your rights.
Examples of Creditor Harassment in Michigan
Creditor harassment can take various forms. There are certain behaviors that cross the legal line and are considered harassment:
Excessive Phone Calls
Michigan debt collectors may attempt to overwhelm debtors by calling them incessantly. This tactic is designed to coerce payment through stress and frustration. For example, a debt collector might call a debtor 10 or more times a day, even after the debtor explicitly requests that the calls stop.
Such behavior violates both Michigan law and federal law. It demonstrates an intent to harass rather than to communicate constructively. Debtors have the right to request, in writing, that the debt collector cease further communication. Once such a request is received, continued phone calls are illegal except under specific conditions, such as informing the debtor of legal actions.
Misleading Letters
Collection agencies may send a letter to the debtor in which they make a false allegation that legal action has already been taken against them. This behavior is illegal because it misrepresents the legal status of the debt. It also violates federal law, which prohibits false or misleading representation from creditors. It provokes the debtor into paying under false pretenses since it causes unwarranted panic and financial decisions taken under pressure.
Public Shaming
Debt collectors or creditors sometimes resort to embarrassing the debtor to compel repayment. Examples of this behavior include:
Sending postcards with details about the debt, visible to anyone handling the mail.
Posting notices in public forums, such as community boards or social media, disclosing the debtor’s financial situation.
Public shaming is not only unethical but also a violation of privacy laws under the Federal and Michigan regulations. Debt collection practices must remain confidential, and disclosure of debt details to third parties or the public is strictly prohibited.
Contacting Family Members
Under the pretense of “locating” the debtor or applying pressure on repayment, debt collectors could try to get in touch with a debtor’s friend, neighbor, or relative. Sometimes, they might divulge particular debt-related information to these people. As such:
- A collector calls the debtor’s parents, stating the exact amount owed and implying the debtor is avoiding payment.
- A neighbor is approached and informed that the debtor is being "investigated for unpaid debts."
This practice is illegal under both federal and Michigan law. Debt collectors are usually restricted to contacting other parties merely to get the debtor’s contact information and are not permitted to divulge the existence of the debt.
Threatening Legal Action Without Basis
Debt collectors sometimes use threats of lawsuits or wage garnishments to intimidate debtors, even when they have no legal authority or intention to follow through. For instance:
- A debt collector tells a debtor that their wages will be garnished if payment is not made immediately, even though no court order exists.
- A collector claims a lawsuit has been filed when no legal action has been initiated.
These threats are violations of the Federal and Michigan law because they mislead the debtor about the legal consequences of nonpayment. Legal action cannot be threatened unless it is lawful, authorized, and genuinely intended.
Collection Efforts After An Automatic Stay
As soon as you file for an automatic stay, debt collectors should stop bothering you.
Sometimes, debt collectors break the rules and keep trying to get money from you. That’s not allowed. In Michigan, if a debt collector harasses you after the automatic stay, they can face legal action.
Federal Protections Against Creditor Harassment
The Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing the behavior of debt collectors. Two agencies namely the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are responsible for enforcing it. [1]
This act applies to debt collectors who are not the original creditors but rather to third-party debt collectors who attempt to recover consumer debts. FDCPA prohibits the following practices:
Harassing Communication
- In the absence of the debtor's permission, debt collectors are not permitted to make contact with customers before 8 a.m. or after 9 p.m.
- Angering, abusing, or harassing the debtor by repeated phone calls is illegal.
- The debt collectors cannot contact the debtor at their place of employment if the employer prohibits them from doing so.
Threats and Intimidation
- Threatening the debtor, family, or property is a legal violation.
- Using profanity to frighten or abuse a debtor is called harassment.
- FDCPA violations include threatening legal action or wage garnishment without intent or authority.
False or Misleading Representations
- Debt collectors cannot misrepresent the amount owed or falsely claim to be attorneys, government officials, or representatives of a credit bureau.
- They can't say the debtor did something illegal or threaten to arrest them if they don't pay.
Unlawful Disclosure
- Discussing the debt with third parties is prohibited. These details can only be disclosed to the debtor’s attorney or spouse.
- It is against the law for debt collectors to leave messages that expose the reason for their call to anyone other than the person paying the debt.
Failure to Validate Debt
A debtor has the right to request written validation of the debt within 30 days of initial communication. Debt collectors must refrain from collecting payments until the debt has been validated.
In addition to the federal regulations that serve as the foundation for ethical debt collection practices, the state of Michigan also has laws that specifically address the issue of harassment against creditors.
Michigan’s Legal Protections Against Creditor Harassment
In the state of Michigan, additional safeguards are provided for debtors through the Michigan Occupational Code (MOC) and other statutes. The Fair Debt Collection Practices Act (FDCPA) works in conjunction with Michigan law. [2]
Regulation of Debt Collection Agencies
- The MOC regulates collection agencies operating in Michigan. Agencies must be licensed and follow ethical standards when collecting debts.
- Violations of the MOC may lead to fines, penalties, or suspension of the agency’s license.
Prohibited Practices Under Michigan Law
Michigan debt collectors cannot:
- Misrepresent debt collection authority or self.
- Collect debt by exaggerating the amount owing or lying about the penalties of nonpayment.
- Communicate in a way that harasses or embarrasses the debtor, including publicly posting the debtor’s name or using postcards to communicate about the debt.
Protections for Wage Garnishment
- Michigan law limits wage garnishment. This ensures that the debtor has enough money for basic needs.Â
- Before taking such action, creditors are required to follow due process and it is necessary for the court to issue a garnishment order.
Creditor Harassment After an Automatic Stay
If you have a lot of debt and decide to file for bankruptcy in Michigan, there’s a special rule called the automatic stay that helps protect you.
What Actions Can Debtors Take?
Michigan creditor harassment victims can take numerous steps to halt the abuse:
Record Everything
Keep track of debt collector contacts, including time, date, and nature. Save voicemails, emails, letters, and any other correspondence that demonstrates harassment.
Request Validation of the Debt
Send a written request for debt validation within 30 days of the initial contact. Debt collectors must provide documentation verifying the debt and its legitimacy.
Send a Cease-and-Desist Letter
Under the FDCPA, you have the right to request in writing that a debt collector stop contacting you. Once received, the collector can only contact you to confirm compliance or inform you of legal action.
File a Complaint
Complaints can be filed with the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), or the Michigan Attorney General’s Office.
Consult an Attorney
Consult a consumer protection attorney if the harassment persists; they will be able to provide you with guidance on how to file a lawsuit. Under the Fair Debt Collection Practices Act (FDCPA), debtors have the legal right to sue collectors for damages, legal fees, and statutory penalties of up to $1,000. [3]
Penalties for Creditor Harassment in Michigan
Debt collectors who violate the FDCPA or Michigan state laws face serious sanctions. The punishments include:
- Federal Penalties: Under the FDCPA, violators may be held accountable for actual damages, statutory damages of up to $1,000, and attorney expenses.Â
- State Penalties: Michigan law allows debtors to submit complaints to regulatory organizations, which can result in penalties, license suspensions, and legal action against collection agencies.
Consequences of Creditor Harassment After an Automatic Stay
If a debt collector breaks the automatic stay rule in Michigan, you or your bankruptcy lawyer can ask the court to step in and make them stop. This is called filing a Motion for Sanctions in the U.S. Bankruptcy Court. You can do this in Eastern or Western Michigan, depending on where you live.
Once you file this request, the court will have a hearing to decide if the debt collector broke the rules and what should happen next. If they did, they can get in serious trouble, including:
- Contempt of Court:Â This means they disobeyed a court rule. They might have to pay fines or legal fees.
- Fines and Penalties:Â The court can charge them money for breaking the law and for any costs you had to pay to fix the problem.
- Compensatory Damages: If their actions caused you stress, lost wages, or other problems, they might have to pay you back for the harm they caused.
- Punitive Damages: If they broke the rule on purpose, the court might make them pay even more money as a punishment to stop them from doing it again.
In short, if a debt collector ignores the automatic stay, you can take action to protect yourself—and they can get in big trouble for it.
Exceptions and Limitations
While debtors are afforded strong protections, it is important to note the following exceptions and limitations:
Original Creditors
The FDCPA does not apply to the original creditor, which is the entity to whom the debt is originally owed. Michigan laws regulate their conduct.
Statute of Limitations
In Michigan, the Statute of Limitations for collecting most debts is six years. [4] After this period, creditors can no longer sue to collect the debt, but they may still attempt to contact the debtor unless told to stop.
Creditor harassment is a serious issue that affects many Michigan residents. Both federal and state laws provide robust protections to ensure that debt collection practices are ethical and respectful.
If you face creditor harassment, contact Goldberg & Loren to discuss the legal options for protecting yourself against abusive practices.Â
FAQs
Creditor harassment occurs when a creditor or debt collector uses abusive, unfair, or illegal tactics to recover a debt. These behaviors violate federal and Michigan state laws designed to protect debtors.
Yes, deceptive communications claiming legal action or wage garnishment violate federal and Michigan statutes. The Fair Debt Collection Practices Act (FDCPA) prohibits such letters, which are intended to put pressure on debtors.
Public shaming entails disclosing debt information via postcards or public notices, such as on social media. This approach is illegal and violates Michigan’s privacy laws as well as the FDCPA.
No, threats of lawsuits or wage garnishments without the intention or legal basis to follow through are illegal. Such tactics are violations of both federal and Michigan laws.
The FDCPA prohibits excessive communication, false representations, threats, and disclosure of debt details to third parties. It ensures ethical behavior by third-party debt collectors.
Yes, Michigan law, notably the Michigan Occupational Code (MOC), governs collection methods and prohibits creditors and collectors from harassing, misrepresenting, or communicating unethically.
No, the FDCPA only covers third-party debt collectors. However, Michigan rules require initial creditors to use ethical debt-collecting techniques.
Michigan law restricts wage garnishments to ensure that debtors have adequate money to cover their fundamental needs.Â
Michigan’s statute of limitations for most debts is six years. Creditors cannot sue to collect the debt after this period, but they may continue to contact you unless advised to cease.
Sources:
[1] Fair Debt Collection Practices Act. (2016b, March 23). Federal Trade Commission. https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text
[2] Michigan compiled laws, Chapter 339. Occupational Code § 339.601 | Findlaw. (n.d.-q). https://codes.findlaw.com/mi/chapter-339-occupational-code/mi-comp-laws-339-601.html
[3] Thompson, L. (2024, May 8). Damages for FDCPA Violations. www.nolo.com. https://www.nolo.com/legal-encyclopedia/damages-fdcpa-violations.html
[4] Defenses in a Debt Collection Case | Michigan Legal Help. (n.d.). https://michiganlegalhelp.org/resources/money-debt-and-consumer-issues/defenses-debt-collection-case
