Consumer attorneys in Michigan have recently filed a rash of class action lawsuits against collection agencies, their attorneys, and even creditors under the Fair Debt Collection Practices Act ("FDCPA") and Michigan law over their alleged practice of adding the costs of unsuccessful garnishments to the balance owed by debtors on unpaid judgments.
The Michigan garnishment court rule states that a judgment creditor is not entitled to recover the costs of the garnishment if the garnishee is not indebted to the judgment debtor and does not hold any property subject to garnishment, and is not the debtor's employer. In the lawsuits, consumers are alleging that collection agencies, their lawyers and some creditors have violated the court rule and the FDCPA by adding the costs of unsuccessful garnishments to debtors' accounts.
The class action lawsuits request damages and attorney fees for all consumers going back a year or more whose accounts include these garnishment costs, along with attorney fees. As usual, the actual "damage" to the consumers for this alleged unlawful practice is minimal, but the suits are driven by the prospect of the consumer's attorneys recovering attorney fees.
If your company routinely adds the costs of unsuccessful garnishments to a debtor's account, you could be at risk of being sued. You should consult with your attorney to discuss when Michigan law allows you to add garnishment costs to a consumer's judgment balance.