Legal Question in Credit and Debt Law in Michigan

Re: credit card in collections, lawsuit

Not exactly. There are several factors that go into this and to address your specific situation I would need more info.

However, generally speaking, when you are alleged to owe money to a person or corporation, that entity has a cause of action within certain limitations to sue you. This gives that entity the chance to prove you owe what they say you owe, and you the chance to defend against that claim.

IF the entity follows proper procedures and IF it is successful in proving the debt and IF you have no affirmative defenses to protect you from that claim, then a judgment will be issued by the court against you. There are then several ways the entity can collect against you: garnishing your wages or your tax return, or putting a lien on any property you own in your name. (To clarify if the judgment is against just you, and your home is in your and your spouse's name, the home is not subject to the lien.)

Additionally, most people's homes are subject to at least one mortgage. That is a secured interest--the first mortgage has priority for payment on its loan, and if there's a second one, that takes second priority. Any creditors who want to attach a lien to your home would have to stand in line behind the others, and they can only pursue a foreclosure based on the lien (the legal process of taking real estate for payment of a debt) if the prior creditors, i.e. mortgage companies and prior judgments, permit them to. This usually will not happen over a $1500 debt because the credit card company will not be willing to pay off your mortgage(s) in order to become first priority.

If your home is paid for, and you don't defend, it is slightly easier for a foreclosure to occur, but even then there are other entities that could have priority (e.g., municipalities).

IT IS VERY IMPORTANT TO HAVE DEFENSE IN THESE ACTIONS. Don't just ignore a summons. There are some ways to avoid the debt even if you do owe it.

Finally if creditors are lying to you are threatening you, you have protection. There are laws governing collection practices and you can report certain collectors to the Atty General or FTC if they are violated. Good luck!

Re: credit card in collections, lawsuit

If a debt collector has threatened to take your home, there is a good likelihood that they have violated the FDCPA. This means you may be able to sue them for at least $1,000. Please call me to give me more details and find out if you can sue them. My telephone number is 248.679.1552.

Rochelle Guznack