On October 2, parties in a class action filed a joint motion for preliminary approval of a proposed settlement resolving allegations that certain debt collectors and creditors collected post-judgment interest from Michigan consumers at a rate that exceeded the limit set by state law. The proposed settlement would certify two settlement classes, one for judgments involving one creditor and one for those involving another creditor. Specifically, Michigan judgment debtors from a certain date who paid interest calculated above the rate allowed by state law on judgments (those not based on a written instrument or promissory note) would comprise both classes.

If approved, the settlement would provide class members with several forms of relief. First, the interest on their judgments would be recalculated at the legal rate, instead of the 13 percent rate initially used, reducing their collective balances by a total of approximately $7 million. Each class member would also receive a $500 credit against the corrected judgment amount, with a “Satisfaction of Judgment” to be filed for those whose balance is eliminated. Finally, class members with a “Credited Judgment Amount” of $0 or less after these adjustments would receive a $150 payment, with up to $240,000 available for these cash payments.

The proposed agreement stated the defendants would pay all administrative costs, as well as incentive awards of $10,000 each to the two class representatives. Attorneys’ fees, costs and expenses would not exceed $1.5 million. Should the settlement be approved, the benefit to the class would be between $9.1 million and $9.34 million, depending on the number of class members with credited judgment amounts of $0 or less who submit a claim. If approved, the settlement would release all claims relating to the collection activities at issue.