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.