The Specter of Monetary Judgments of Courts Past

by Paul Wollner, Legal Intern

Man with glassesRecently at Elder Law of Michigan, I received a phone call from an older gentleman who had purchased a car in his youth.  Being unable to keep up with the car payments after he lost his job at a manufacturing plant, he was forced to return the car.

In short order, the young man turned in the car to the dealership and sought to purge himself of his monetary problems. However, after he turned in the car to the dealership and tried to wash his hand clean of the whole affair, he was soon hit with a default judgment for failing to make whole the car dealership based upon their contract.

Fast -forward thirty some years and to this day, the gentleman is still having his state income tax refunds garnished by a collection agency to help pay down the debt owed for the car he had purchased in his youth.

“Isn’t there some sort of statute of limitations that limits how long after an incident someone can collect?”  Being a legal intern, I told the gentleman that I would talk to our attorneys and get back to him with an answer. Seeing an opportunity to help shed some light on this issue with assistance from our supervising attorney, I decided to study the issue further to get the best possible understanding.

In the State of Michigan, a claimant has six years to file for a breach of contract (MCL 600.5807(8)).  Furthermore, once the court gives a money judgment it is good for a period of ten years (MCL 600.5809(3)).  The text of the law is a bit confusing to understand. It is clear from the language that a money judgment may be renewed.  What were unclear on its face, however, are how many times the money judgment can be renewed.  A party could be sued up to six years after a breach of contract.  Upon being awarded a money judgment in court the plaintiff is given 10 additional years for which to collect on that judgment.  Furthermore, upon renewal, the judgment is good for another 10 years.  Conceivably the young car buyer could still legally be paying for the car that he had purchased over 26 years prior.

But after the first renewal could there be another renewal of the money judgment?  That was a bit more difficult to discern from the language.  Instead of reading the statutes a more clear, concise answer was to be found in the case law of the State of Michigan.  Consolidated Rail Co v. Yashinsky provides the answer.  The opinion states this limit, (talking about the number of times a judgment can be renewed), states:  “a party can extend a judgment indefinitely by renewal by filing renewal actions to enforce the judgment, but must be filed within ten years “from the time of the rendition of the judgment or decree.”  Mich. Comp. Laws Ann. § 600.5809(3). Hence, a person could be responsible for monetary judgments decades after the judgment has come down.

Don’t let the specter of judgments past ruin your finances.  Be prudent, smart, and punctual in all your owed obligations so that instead of worrying about tax garnishments, you can enjoy your life and look back fondly.

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