This toolkit tells you what you need to know if you have been sued by someone trying to collect a debt from you. For general information about this process and your options, read the Articles on this page. Review the Common Questions if you have a specific question. If you want to respond to the complaint you received, use the Court Forms links for help preparing the forms you will need. Use one of the Checklists below to make sure you followed all the steps in the process. The links under Court Information will tell you about the court that will handle your case.
Common Questions
Always respond to court papers. If you do not respond within the time allowed your creditor can get a default judgment against you. You have 21 days to respond if you’re personally given the papers. You have 28 days to respond if you get them in the mail or if you are given them outside of Michigan. For more information read the article Going to Court to Defend a Debt Collection Case.
Additionally, you can try and work out an agreement with your creditor to avoid going to court. If you reach an agreement with your creditor after you get the complaint you can agree to sign a Consent of Judgment or agree to have the case dismissed. You should still contact the court to see if you need to go to a hearing to tell the court about your agreement otherwise your creditor could get a default judgment against you.
Garnishment is a court process that allows a creditor to collect money from a garnishee. A garnishee is someone who has control of the debtor’s money or assets, or who pays the debtor. For example, a garnishee could be a bank, employer, a tenant, or the State of Michigan.
Read the article An Overview of Garnishment to start learning about the process of garnishment.
If it’s a nonperiodic garnishment, it goes to your bank first. As soon as the bank gets a Writ of garnishment against you, your account may be frozen – you will not be able to get any of the money there. This could mean that any checks you just sent out may bounce and the bank may charge you additional fees.
When a bank gets a writ of garnishment, it has seven days to serve it on you by mailing or giving you a copy.
You might have a reason to object to the garnishment. If so, file your objection with the court within 14 days of getting the notice of garnishment if you hope to stop the garnishment. See the article Objecting to Garnishments for information about when and how to object to a garnishment.
Short of paying the entire debt, you can’t do much to prevent a nonperiodic garnishment after a writ is issued.
If it’s a periodic garnishment, your employer should notify you before it goes into effect. If you don’t get the notice, you might have a reason to object to it.
You can file a Motion for an Installment Payment Plan, which will stop and prevent periodic garnishments. It won’t stop nonperiodic garnishments. See the article Getting an Installment Payment Plan for more information about this.
You may be able to file an objection to the garnishment if it is improper for some reason. You have 14 days after you’re notified of the garnishment to file an objection.
Being "uncollectible" means:
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Your income is limited and only comes from certain sources,
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You only have limited assets,
AND
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After you pay for housing, food, and other necessary expenses you don’t have any money left.
In other words, you have nothing that could be garnished to pay your debts.
To be uncollectible, your income must only come from one or more of the following sources, which can’t be garnished:
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Social Security Administration (SSA) benefits
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Supplemental Security Income (SSI) payments
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Department of Mental Health Family Support Subsidies
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State Public Assistance Benefit payments, such as General Assistance Benefits, Family Independence Program (FIP), Food Assistance Program (FAP), Electronic Benefits Transfer (EBT), State Disability Assistance (SDA)
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Veterans Affairs (VA) benefits
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Railroad Retirement benefits
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Black Lung benefits
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Worker’s Compensation benefits
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Student loans, grants, or work assistance
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Payments or distributions from an Individual Retirement Account (IRA) annuity
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Income benefits under the Michigan Civil Service Act
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Private health or life insurance disability insurance due to injury or sickness of any insured person
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Home Heating Credit
AND your only valuable assets are:
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A vehicle or household items worth less than $1,000 each
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A bank account with funds only from the sources that can’t be garnished, as listed above.
You can send a debt collector a letter asking them to stop contacting you about the debt. You can also send a letter to your creditor explaining why you are uncollectible and asking for a "charge-off" of the account as a bad debt. You can see examples of these letters in the article Are you Uncollectible?
Getting a charge-off does not mean the debt is discharged. You still owe the debt, and having a charge-off on your credit report can do significant damage to your credit score. Your creditor can still try to sue you to collect the debt.
Being uncollectible might not stop creditors from suing you. If you are sued, you should respond to court papers and do your best to defend your case.
A creditor with a judgment against you can try to collect by garnishing your income, bank accounts or tax returns, or by seizing your property. Being uncollectible means you don't have any income or money that's not exempt from garnishment or any property that can be seized to pay the debt. If a creditor tries to garnish your exempt money or income, you should file an objection to the garnishment. Read the articleObjecting to Garnishments to learn about this.
If your financial situation improves so that you’re no longer uncollectible, you should try to find a way to pay your debts.
If you find a job, inherit money, or win the lottery, your creditor might try to get money from you then by suing you. If a creditor gets a judgment, it will be able to garnish your accounts or income, or to seize whatever assets you might then have. For more information about garnishments, please see the article An Overview of Garnishments.