The Statute of Limitations for Debt in Michigan

The Statute of Limitations for Debt in Michigan
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When bills begin to accumulate and you fall behind on payments, there's a risk of the creditor filing a lawsuit against you. In Michigan and other states, however, creditors seeking enforcement of their claims have a legal deadline -- known as a statute of limitations -- to consider. If you have aging debts in Michigan, familiarize yourself with the state's debt SOL.

The Basics of Michigan's Statute of Limitations

The statute of limitations on contracts under Michigan law is six years. This means that on the sixth anniversary of the agreement, or of the last payment on the agreement, the creditor no longer has the right to file suit and seek a court judgment to enforce the debt. With a credit card account, for example, a payment on June 30, 2014, means the statute of limitations on that account -- assuming no further payments -- would run out on July 1, 2020.

Affirmative Defenses on SOL Grounds

If a creditor files a lawsuit past the statute of limitations date, the court will not automatically dismiss it. The defendant has the obligation to answer the complaint and make a claim of his own: that the state's statute of limitations has run out. This is known as an affirmative defense and, if found valid by the court, will ordinarily result in a dismissal. If the defendant does nothing, however, the creditor has the right to pursue a deficiency judgment, ask the court to find you in default and allow enforcement with levies, liens or garnishment.

Michigan Time Limits on Judgments

Once a creditor obtains a judgment, Michigan law allows an indefinite period of time in which to collect as long as the creditor applies in the court of record to renew the judgment every 10 years. If a creditor is attempting to collect on an out-of-state debt, or filing papers to collect on a judgment issued by a different court, this limit falls to six years.

Unethical Creditors and Bankruptcy

It's not uncommon for creditors and collection agencies to continue to pursue debtors past the statute of limitations. Any payments made at this point are entirely voluntary on the debtor's part, however, and Michigan has a consumer protection law that bans fraud, harassment and misrepresentation on the part of creditors or their agents. In addition, filing for bankruptcy protection will temporarily "toll" or suspend the statute of limitations, while stopping collection actions by creditors while the case is pending.