Lansing, MI - Michigan Attorney General Dana Nessel is reissuing 5 of her debt-related alerts at the end of this year’s Debt Awareness Week to help educate residents on ways they can take control of their debt. She also wants to make them aware of some of the scams rolled out at this time of year and all year round by bad actors attempting to separate them from their money.
“Debt Awareness Week is a time for us to reassess our budgetary wellness and chart a path for a healthy financial future,” Nessel said. “With these consumer alerts, my office aims to provide actionable guidance and resources to help individuals make informed financial decisions and protect themselves from exploitation. These efforts underscore our commitment to safeguarding consumers and promoting financial literacy across Michigan all year round.”
Tax Debt Resolution Scams
Most of us do not need a reminder that the deadline for filing income taxes looms large less than a month away. AG Nessel’s reissue of her Tax Debt Resolution Scams alert will inform those who may owe the Internal Revenue Service (IRS) about what to look for when companies promise tax debt relief.
Each year, thousands of taxpayers find themselves indebted to the IRS as a result of underreporting or underpaying their taxes. Whether done accidentally or with intent, these omissions can cause a great deal of stress, especially if the IRS places a lien on assets or possessions.
The Attorney General’s tax debt resolution alert outlines how tax debt relief scams work, which is by scouring tax lien notices to target taxpayers and also using email, U.S. mail, TV, and the internet to recruit as many clients as possible. Companies like these employ mostly sales staff who work on commission with the victims paying an advance fee for services they may not receive.
Payday Loans
Some may take another route to resolve debt and may consider a payday loan to be a quick solution to an urgent short-term cash crunch. Nessel has reissued her alert, Payday Loans: Know Your Rights, to let residents know that these types of loans -- short-term, high-cost loans that often require the borrower to write a personal check to the lender -- may not be the answer to their debt troubles. Often, payday loans leave the borrower in a vicious cycle of increasing debt with no way of escape.
AG Nessel’s payday loan alert outlines the regulations that must be followed according to the Deferred Presentment Service Transaction Act, which governs payday loans in Michigan.
Auto Title Loans
Auto title loans are another resource some people turn to when their cash on hand falls short of their needs. The alert, Auto Title Loans: Put the Brakes on Before You Get Caught in a Cycle of Debt or Lose Your Car, outlines what lenders can and cannot do with respect to auto title loans.
Under Michigan law, lenders are not allowed to take physical possession of the borrower’s vehicle title. Fast-cash loans can appear enticing to those with poor credit and urgent money needs. However, these loans are not the solution. If borrowers are unable to pay off the loan on time, the debt may be rolled over into a new loan, which would add fees and interest to the amount already owed.
In a short period of time, the borrower is drowning in debt and their long-term financial stability is jeopardized. Michigan residents who apply for an auto title loan online or through national advertisements run the risk of losing their car and being left without transportation and without a path to pay their debt.
To arm consumers with the ability to make wiser financial decisions, the Federal Trade Commission provides a list of alternatives to title loans for those in need of fast cash.
Cosigning a Loan
One financial decision that can have far-reaching consequences is agreeing to cosign a loan for a friend or family member.
As the Attorney General’s Cosigning A Loan? Know the Risks! alert points out, when a potential borrower’s credit history does not meet the lender’s standards, the lender may require a cosigner. This individual must add their information to the loan application as a guarantor. Becoming a cosigner means you become legally obligated to repay the loan if the primary borrower defaults.
No one should be coerced by a lender into cosigning a loan.
You cannot be required to have a cosigner if you qualify for a loan on your own. Nor can your spouse be forced to be a cosigner unless you are applying for the loan jointly. Unscrupulous lenders can be reported to the Consumer Financial Protection Bureau.
Debt Collection Scams
In the event that you are contacted by a debt collector, AG Nessel’s Debt Collection & Debt Collection Scams alert provides tips on how to distinguish legitimate creditors from imposters and how debt collectors in Michigan should operate. The alert goes on to advise consumers who receive debt collector calls to:
- Avoid sending money or following the caller’s instructions.
- Contact local police if you believe you are in danger.
- Alert your banking institution that your account may have been compromised.
- Put a freeze on your credit reports with all 3 credit reporting agencies.
Debt Awareness Week began in 2014 in the United Kingdom, initiated by StepChange Debt Charity, a debt advice service operating under the belief that no one should have to pay for debt advice.
The Department of Attorney General’s Consumer Protection Team can provide resources to Michigan residents who need help with debt. Those who wish to file a complaint can contact the Department of Attorney General’s Consumer Protection Team:
Consumer Protection Team
P.O. Box 30213
Lansing, MI 48909
517-335-7599
Fax: 517-241-3771
Toll-free: 877-765-8388
Online complaint form