You have 21 days to respond to a debt lawsuit if you are facing one in Michigan. To avoid a default judgment, you should file an Answer to the case even if you plan to settle the debt before the court.
There is no escaping debt. More than three-fourths of Americans carry debt, whether it is credit card debt, auto loans, or mortgages. Similarly, if you are like most Americans, you work hard to pay your debts, but it only takes one setback to make your finances spiral out of control.
If you cannot make your loan payments, your creditors will contact you and send you a letter. If you do not return to your repayment schedule, they may charge off your debt, sell it to a collection agency, or sue you for the debt.
A judgment will be obtained by creditors and debt collectors who successfully win a debt lawsuit against you. They can garnish your wages or freeze your bank account until you fully repay your debt. A significant portion of your income may be used to repay debt, and you won’t be in control of your finances.
No one wants to be sued for a debt, but you certainly do not want a judgment against you. If you repay your debt before the court date, you can prevent the lawsuit from proceeding further.
If you cannot repay your debt fully, debt settlement may be your best option.
In this article, we will discuss everything you need to know about how to settle a debt in Michigan. Let’s get started.
To settle Michigan debt, follow these three steps

There are three steps you should take if you are interested in debt settlement, and they are as follows:
- Answer the debt lawsuit.
- Start negotiating by making an offer.
- The settlement agreement should be in writing.
1. The debt lawsuit needs to be responded to
 You should still respond to the lawsuit even if you intend to settle the debt before your court date. You will have time to negotiate a settlement without worrying about a default judgment being entered against you. Here is how it works.
A Complaint will be filed with the local court in Michigan by your creditor or debt collector to initiate the legal process against you. You will receive a copy of the Complaint and a summons to appear.
Complaints describe the claims your creditor has against you, including the amount of the debt and any interest that has accrued.
In Michigan, you have 21 days to respond to a debt lawsuit before you are automatically liable for the debt.
Failure to respond to the Complaint on time will result in a default judgment for the creditor or collector. Defending yourself against a lawsuit is done by submitting a legal response, known as an Answer.
As part of your Answer, you must respond to each claim in the Complaint, stating your affirmative defenses. It is possible to argue that the case lacks jurisdiction, that the obligation was not properly validated, or that the statute of limitations has expired.
If your efforts fail, an Answer prevents a default judgment against you if you intend to repay the debt in part or total before the due date. As a result, you have the opportunity to defend yourself in court.
2. Make an offer to start the negotiation
The next step is determining how much you can offer to settle the debt and how much the creditor or debt collector may accept. Typically, debts are settled for a wide range of amounts, so you may need to examine your financial situation and research your creditor to determine a reasonable settlement amount.
Find out how much you can afford
Count how much money you have left over each month after paying for food, shelter, utilities, and transportation. Subtract other costs that must be paid, such as non-delinquent debt. Add the difference if you have any savings available to pay off this debt. The sum represents your available amount to pay off the n this case.
The amount available to settle is equal to (monthly income – monthly costs) + savings
Estimate how much the creditor or collector will accept
It is common for debts to be settled within a broad range of amounts. Settlements range from 1% to over 100% of the total debt. Under the Regan Report of the America Fair Credit Council, the average consumer can achieve a debt settlement of 50% when working with a debt settlement company.
As a result, we recommend offering at least 60% of the total value of your debt.
You can show your creditor that you are serious about settling the matter with this amount. The judge will consider the cost of pursuing a judgment and the possibility of paying for a lesser amount.
It is essential for consumers who cannot pay 60% of the settlement to explain their circumstances. Collection agencies and creditors may accept less from consumers if they understand they are experiencing hardship.
You’ll probably have to go through several negotiation rounds before reaching an agreement. Only accept a deal that you can fulfill. If you do and do not pay, the lawsuit will continue, and they will likely win.
Here’s an example of what you might say in your initial offer:
“I see you’re suing me for [$___] for [case number]. I don’t have that kind of money and I don’t agree with the amount. But I do have [$___] that I can pay within 30 days to settle the debt in full. Let me know if you accept.”
3. There should be a written settlement agreement
If you reach a debt settlement agreement, get it in writing before transferring any funds. By signing a contract, you ensure that both you and the creditor or collector understand the terms and conditions of the agreement.
Your agreement must specify how much you will repay when the payment is due and how the payment will be made. In addition, it should state that the creditor or collector waives the right to the remaining balance and will not pursue further collection activities against you.
The agreement should be notarized. In addition to providing an additional legal layer of protection, the notarization of the agreement ensures that there is a witness to your signature.
Following a brief overview of the debt settlement process, let’s explore an example of how debt can be settled in Michigan.
Lisa receives a summons and Complaint in Michigan, informing her that LVNV Funding is suing her for a $2000 credit card debt. Lisa cannot repay the entire debt before her court date, so she attempts debt settlement. She files an Answer to the case by the 21-day deadline set by Michigan. Looking at her finances, she determines that she can pay off $1,200 today, which is 60% of the debt. An initial offer of 40%, or $800, is sent. She has room to negotiate because of this. LVNV Funding sends a counteroffer, and after some negotiating, they agree to settle for 55% of the debt, or $1,100. The case is dismissed as soon as Lisa’s payment is transferred to LVNV Funding. In addition to saving money, avoiding court, keeping her financial information safe from collectors, and reestablishing her finances, Lisa also avoids going to court.
How does Michigan’s debt collection and debt settlement law work?
In Michigan, debt collectors are prohibited from taking specific actions under the Fair Debt Collection Practices Act (FDCPA), including:
- Contacting consumers before 8 a.m. and after 9 p.m. regarding debts.
- If a debtor does not pay a debt, they will be sent to prison.
- The act of harassing a consumer at their place of employment.
- Getting in touch with a debtor more than seven times within seven days.
- The use of threatening language to persuade a debtor to make a payment.
As well as the FDCPA, Michigan has its own debt collection rules under MI Comp L § 339.915 (2021). Following the statute, debt collectors are prohibited from:
- Communicating in a manner that resembles a court form or judicial process.
- Providing misleading information regarding a debt.
- The act of misrepresenting oneself as another person, such as a law enforcement officer.
- Violence is threatened as a result of non-payment of a debt.
- Communicating with a debtor using a postcard.
It is important to note that Michigan has a statute of limitations that limits the time a debt collector has to pursue a lawsuit. By MI Comp L 600.5807 (2021), creditors have six years to initiate legal action for written or oral contracts. There is a six-year limitation on debt on account under Michigan Comp L 600.5813 (1996 through Reg Sess).
What is I choose the right debt settlement company?

The following are other debt settlement companies in Michigan that you can trust:
- Freedom Debt Relief: Over the past decade, Freedom Debt Relief has assisted thousands of consumers in resolving unsecured debts. You must have a minimum of $10,000 in debt and commit to making monthly payments toward debt settlement to qualify for its programs. In most cases, the program is completed within two to four years.
- National Debt Relief: In addition to being a significant provider of debt settlement services, National Debt Relief offers a program that can be completed within two to four years. The company charges a fee of 15% to 25% of the debt’s value.
- Century Support Services: This is another debt relief company that is very popular with its customers. In the past few years, the organization has assisted customers in resolving more than $1.7 billion in debt. Depending on how much a client seeks to settle, Century Support Services charges them from 18% to 25% of the debt they wish to settle.
- Accredited Debt Relief: Assists consumers with multiple outstanding obligations in resolving their debts. Typically, these programs last between two and four years and cost 15 and 25% of the total debt. Program participants can reduce their obligations to a significant extent if they qualify.
How can I get in touch with a collector?
If you are ready to settle your debt, you can contact a debt collector via phone, email, or letter.
Use email because it’s quick and records your correspondence with the collector.
However, if you prefer to speak directly with the debt collector, you may call them. Call if you need to explain a job loss, illness, or other extenuating circumstances.
If you decide to contact us, we recommend that you record the conversation. A debt collector must consent to the recording before you start under MI Comp L 750.539c.
It would help if you kept in mind that debt collectors prefer to speak with you over the phone. Their skill in manipulating and intimidating consumers indicates that they are professional negotiators. Therefore, getting proof of all phone conversations you have with collectors is essential.
Michigan debt settlement FAQs
Do you have any further questions regarding debt settlement in Michigan? Here are some of the most frequently asked questions.
When it comes to settling a debt, what is a reasonable offer?
We recommend you begin the debt settlement process with an offer of at least 60%. It is sufficient to show your creditor that you are ready to settle, and they are likely to accept it over regular monthly payments. It’s okay if you can’t provide that much, but make sure you offer what you can.
In Michigan, when does a debt become uncollectible?
In Michigan, the statute of limitations for debts is six years. Following that period’s expiration, creditors can no longer obtain a judgment against you. Despite this, they may still report your account to the credit bureaus and continue contacting you.
Paying off a debt is better than settling one?
It is better to pay your debts in full rather than in installments. By settling your debt, you can avoid a judgment if you face a difficult financial situation. Upon settlement of the obligation, you will no longer be subject to collection activities.