Michigan House Bill HB4890

Michigan 2025-2026 Regular Session

• Introduced: 9/11/25
• Refer: 9/11/25

Caption

Occupations: collection practices; references to collection agencies in 1989 PA 211; revise. Amends sec. 2 of 1989 PA 211 (MCL 445.272). TIE BAR WITH: HB 4887'25

Impact

The implications of HB 4890 on state law are significant in terms of consumer protection. It reinforces the need for transparency and communication in the collection process, ensuring that cosigners are given fair notice before any negative credit actions can be initiated against them. Such provisions may lead to a decrease in negative reporting cases against individuals who were unaware of their obligations, which can ultimately improve the financial well-being of cosigners who might be caught off-guard by defaulting debtors.

Summary

House Bill 4890 aims to amend the existing 1989 PA 211 legislation regarding the notice requirements for cosigners of debts. The bill stipulates that before reporting adverse information about a cosigner to consumer reporting agencies, the collectors must provide a default notice to the cosigner via first-class mail. This notice informs the cosigner of the primary obligor's delinquency and the responsibility of the cosigner toward the obligation, protecting them from immediate adverse reporting without being notified. The bill emphasizes communication and offers cosigners a minimum of 30 days to respond before any adverse actions are taken against their credit profile.

Contention

The bill may face contention primarily from the collection agencies and credit reporting sectors who might argue that the additional notification requirements could delay their collections processes. These agencies could claim that the required action of sending out notices may hinder their ability to collect debts promptly. Opponents of the bill might also express concerns regarding the potential for increased operational costs stemming from the added administrative tasks required in handling notifications and appeals regarding cosigners' debt responsibilities.