LANSING, Mich. (WLNS) — A new report shows that debt collection cases dominate Michigan’s civil court dockets, primarily affecting low-income people and those living in majority-Black neighborhoods.
According to a report from the ‘Justice for All Commission,’ more than half of all cases are filed by five large national companies that buy debts for pennies on the dollar from original creditors.
The report also states half of all debt collection lawsuits in Michigan are brought against people living in low-income and majority-Black neighborhoods. Plus, consumers living in majority Black neighborhoods are twice as likely to have a debt collection lawsuit filed against them.
“The Michigan Constitution requires that the Supreme Court aid in the administration of justice, and this groundbreaking research will help us improve how trial courts handle debt collection cases to make the process easier to navigate and more equitable, efficient, and consistent,” said JFAC Chair Justice Brian Zahra. “As a former trial court judge, I understand how difficult it is for unrepresented litigants to navigate court rules and procedures. These difficult hurdles for parties without a lawyer create barriers to the fair administration of justice in our courts.”
Another key finding from the Justice for All Commission report is that 68% of debt collection cases in Michigan end in an automatic win for the plaintiff, which is also known as a default judgment.
In addition, most of the time consumers in debt collection cases don’t have representation, while creditors are almost always represented.
In light of the report, the Justice for All Commission has released a series of recommendations, which include:
- Modernizing serving of process rules to help ensure that consumers receive notice of the lawsuit filed against them;
- Increasing the amount of information to be included in the complaint to help ensure that the plaintiff has provided sufficient evidence to support a default judgment;
- Creating court documents and forms that consumers can easily understand and use;
- Improving our understanding of debt collection in Michigan through a more optimized use of court records;
- Engaging with consumers who have faced debt collection litigation to understand the barriers they encounter in court processes; and
- Developing pilot projects to find alternatives to litigation that help creditors, consumers, and courts.
To view the full report, click here.