Legal Question in Credit and Debt Law in Michigan

My question is concerning out standing credit debt:

About 3 years ago I went to court for a credit card that had gone into collections. I agreed to pay $100 monthly until the debt was paid ($5,586). Shortly after making this arrangement I lost my job of 5 years. I contacted the creditor immediately letting them know that I wouldn't be able to make the full payment but would pay something each month and then pay extra to catch up when I recovered my income. The creditor was unwilling to work with me because of the judgement. They continued to withdraw payments from my already overdrawn accounts pushing me further into debt twice a month!(when the money wasn't available on the first try, they would try a second time--prompting my bank to close my accounts and remove my banking privileges.)

6 months later I had not only recovered, but doubled my income (I am self employed). I contacted the creditor and again offered to make double monthly payments until caught up and then go back to the agreed upon $100 payments. Again, the creditor was unwilling to work with me stating that they would only accept a one time payment of the debt in full. Not knowing what to do I focused on paying off my other credit cards (I had 8, I have paid off 5 (almost 6) of them in the past three years!). I received a letter from the court stating that further action would be taken...but in 3 years nothing has been done. This same creditor also owns one of my other accounts that I pay monthly.

Anyway, what I'm wondering is, will they be obligated to accept my payments if I just start sending them in or do I have to go through the courts and file a motion for manageable payments (as advised by legal aid 3 years ago). I'm concerned that the payment plan won't be manageable. I just don't want to poke a sleeping bear!

Asked on 7/25/15, 7:19 am

1 Answer from Attorneys

Andrew Campbell Andrew L Attorney at Law

The judgment is gathering interest so the sooner it is paid the better. If you file a motion for installment payments and you show your income and your reasonable expenses neatly typed or printed on a separate piece of paper, I would have a hard time believing a good judge would not allow you to make payments at that amount. Some judges have different policies than others so I could not advise you unless I knew that particular judges policies. Of course, I am assuming your expenses are reasonable. So not poking that sleeping bear is resulting in interest accruing on the judgment which could be as high as 13%. I wouldn't know what course to pursue without knowing your entire debt situation and your other interest rates. Without that information I could not properly advise you. For now, my recommendation is to pay off any judgments as a satisfaction of judgment (the document filed with the court showing the debt has been paid) is something positive that will help your credit score. Keep debts out of court as much as possible. This might mean that you will have to stop paying down your other cards for the time being.

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Answered on 7/25/15, 7:45 am

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