Research Reports

Debt Collection Disproportionately Impacts, Creates Greater Inequity for MI Residents

Share

This week, the Justice for All Commission (JFAC) released a comprehensive report on debt collection lawsuits across Michigan. The findings reveal that debt collection cases overwhelmingly dominate the state’s civil courts, and disproportionately target consumers in majority Black neighborhoods, at all income levels.

The report also revealed more than half of the debt collection cases are brought by five national companies, with almost 70 percent ending in automatic wins, or default judgments, for the plaintiff. Most consumers are left to navigate these lawsuits without legal representation in court. Fully 3-in-4 cases end in asset seizures, wages and even state tax returns—a tactic rarely used in other states that is widely used across Michigan.

Additionally, the filing rate against people living in majority Black communities is two to three times higher than case filings against people living in majority non-Hispanic White communities.

To address these realities of debt collection cases in Michigan, the JFAC offers the following recommendations for civil courts to make data-informed improvements, including:

  • Modernizing process server rules to help ensure that consumers receive notice of the lawsuit filed against them.

  • Increasing the amount of information to be included in the complaint to help ensure that the plaintiff has provided sufficient evidence to support a default judgment.

  • Creating court documents and forms that consumers can easily understand and use.

  • Developing pilot projects to find alternatives to litigation that help creditors, consumers, and courts.

The report is a collaboration between the JFAC, The Joyce Foundation, The Pew Charitable Trusts, and January Advisors. JFAC solicited input from many stakeholders – including state attorneys, legal aid representatives, advocates, and court staff – to inform the recommendations.

“The Joyce Foundation is committed to helping create avenues of economic mobility for people throughout the Great Lakes region. Opaque debt collection practices in Michigan trap residents in a downward economic spiral, creating life-long financial challenges. That majority-Black communities are disproportionately impacted exacerbates systemic economic inequities in those communities,” said Whitney Smith, Executive Vice President and Chief Strategy Officer. “JFAC’s report provides strong recommendations for creating a more fair and just debt collection system in Michigan so that residents have a fighting chance at a brighter financial future.”

Read the full report about debt collection cases in Michigan from our grantee partners here.

About The Joyce Foundation

Joyce is a nonpartisan, private foundation that invests in evidence-informed public policies and strategies to advance racial equity and economic mobility for the next generation in the Great Lakes region. We support policy research, development, and advocacy in six program areas: Culture, Democracy, Education & Economic Mobility, Environment, Gun Violence Prevention & Justice Reform, and Journalism. We focus our grant making primarily in Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, while also exploring promising, evidence-informed policy solutions nationally and at the federal level.

Related Content

In The Media

Why Representation and Accessibility Matter: A Conversation with Kayce Ataiyero, hosted by Chanda Smith Baker

Kayce Ataiyero discusses her journalism background and current leadership in philanthropy, and why both sectors must create a better environment for people of color to thrive and ascend.

Source
Minneapolis Foundation

Research Report

Debt Collection Disproportionately Impacts, Creates Greater Inequity for MI Residents

This week, the Justice for All Commission (JFAC) released a comprehensive report on debt collection lawsuits across Michigan.

News

Joyce Democracy Grantees Ramp Up Great Lakes Voter Education, Protection Efforts

Democracy nonpartisan organizations working to get out the vote in Great Lakes region.

In The Media

Crain's 2022 Notable Black Leaders and Executives

Crain's Chicago Business features Kayce Ataiyero as one of the 2022 Notable Black Leaders and Executives. Kayce Ataiyero is the Chief External Affairs Officer at the Joyce Foundation..

Source
Crain's Chicago Business

In The Media

How a Philanthropic Bet on Violence Intervention Is Winning Public Dollars

State, local, and city agencies are investing about $150 million this year in a variety of community violence-intervention strategies that philanthropy is road-testing. Read more about how the Joyce Foundation and others are stepping in to fund CVI work.

Source
The Chronicle of Philanthropy

Grantee Spotlight

They Got NEXT — Chicago Sinfonietta Celebrates 35 Years

During the height of the COVID-19 pandemic, the Chicago Sinfonietta, like so many organizations, was forced to reimagine itself, pivoting programming and performances to a fully virtual space.

Grantee
Chicago Sinfonietta

News

University of Michigan Releases National Framework to Measure Energy Equity

The Energy Equity Project (EEP) at the University of Michigan School for Environment and Sustainability recently released the first national framework to comprehensively measure and advance energy equity.

In The Media

Media Impact Funders spotlights The Joyce Foundation

Joyce Foundation’s Kayce Ataiyero (Chief External Affairs Officer) and Hugh Dellios (Journalism Senior Program Officer) discuss the Foundation's strategy behind the Journalism grantmaking portfolio.

Source
Media Impact Funders