Michigan Court Approves $1.5M Settlement in Debt Collection Class Action
Summary
A U.S. District Court in Michigan granted final approval to a class action settlement resolving claims that a creditor law firm and affiliated debt buyers charged improper 13% post-judgment interest rates. The court approved $150 per class member for 250 class members (totaling $37,500 in direct benefits) and separate attorneys' fees of $1.5 million.
What changed
A U.S. District Court for the Western District of Michigan granted final approval to a class action settlement involving a creditor law firm and debt buyers. The plaintiffs alleged the defendants improperly applied Michigan's maximum 13% post-judgment interest rate (reserved for judgments on written instruments) to judgments that lacked written instruments. The settlement provides $150 per class member for 250 class members whose judgment balances were reduced to zero, plus $1.5 million in attorneys' fees.
Businesses involved in debt buying, collection litigation, or judgment enforcement should review post-judgment interest calculations to ensure rates align with the nature of the underlying obligation. This settlement highlights ongoing regulatory and legal attention on consumer debt collection practices and the potential exposure from improper interest rate application.
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Apr 17, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
April 17, 2026
Michigan Court Grants Final Approval to Debt Collection Interest-Rate Settlement
A.J.S. Dhaliwal, Mehul Madia, Maxwell Earp-Thomas Sheppard, Mullin, Richter & Hampton LLP + Follow Contact LinkedIn Facebook X ;) Embed
On April 13, the U.S. District Court for the Western District of Michigan granted final approval of a class action settlement resolving claims against a creditor law firm and affiliated debt buyers arising from allegedly excessive post-judgment interest charges in debt collection proceedings.
The creditor law firm charged debtors a 13% post-judgment interest rate, the maximum allowed under Michigan law for judgments rendered on a written instrument. But in their March 2017 complaint, the debtors said none of their judgments included a written instrument, which made the 13% interest rate improper.
Any class member whose judgment balance was reduced to zero is eligible for a monetary award of $150, on a claims-made basis. This amounts to a total benefit of $37,500 for the 250 class members. In a separate order, the court approved payment of $1.5 million in attorneys’ fees to the plaintiffs.
Putting It Into Practice: Consumer debt collection requirements remain an active area of regulatory and legal attention (previously discussed here). Businesses involved in debt buying, collection litigation, or judgment enforcement should review whether post-judgment interest is being calculated and applied correctly, especially where account treatment may depend on the nature of the underlying obligation.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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