LANSING, Mich. (WLNS) — Debt collection cases dominate Michigan’s civil courts, primarily affecting low-income people and those living in black-majority neighborhoods, a new report shows.

According to a report by the Fairness 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 says that half of all debt collection lawsuits in Michigan are filed against people who live in low-income, black-majority neighborhoods. In addition, consumers who live in areas with the largest black population are twice as likely to experience debt collection.

“The Michigan Constitution requires the Supreme Court to assist in the administration of justice, and this groundbreaking study will help us improve the way trial courts handle debt collection cases to make the process easier to navigate and more fair, efficient and consistent.” — said JFAC. Presiding Judge Brian Zahra. “As a former trial court judge, I understand how difficult it is for disinterested litigants to navigate court rules and procedures. These complex obstacles for litigants without counsel create obstacles to the fair administration of justice in our courts.”

Another major finding from the Fairness for All Commission report is that 68% of debt collection cases in Michigan end in an automatic win for the plaintiff, also known as a default judgment.

Also, most of the time, consumers in debt collection cases are unrepresented, while creditors are almost always represented.

In light of the report, the Fairness for All Commission issued a number of recommendations, including:

  • Modernizing the service of procedural rules to ensure that consumers receive notice of a claim filed against them;
  • Increasing the amount of information that must be included in a complaint to ensure that the plaintiff has presented 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 more optimized use of court records;
  • Engaging with consumers facing debt collection litigation to understand the barriers they face in litigation; and
  • Developing pilot projects to find alternatives to litigation that help creditors, consumers and courts.

To view the full report, Click here.

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