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Are Premarital Assets Exempt from Division in Divorce?

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Divorce Lawyer

Courts may consider several factors when deciding to exclude premarital property from assets that are divided in a divorce. Those factors include (1) the length of the marriage, (2) the needs of the parties, (3) the needs of the children, (4) the earning power of the parties, (5) the source of the property, (6) where the contributions toward property acquisitions came from, and (7) the cause of the divorce, including fault in the breakdown of the marriage. The court may consider other factors it finds to be relevant in a given situation.  Fault generally plays less a role than many clients wish and it may not be used to punish the other party to produce an inequitable result.

As a general rule, a party’s premarital assets are not considered divisible in a divorce unless the other spouse contributed to the acquisition, improvement or accumulation of the property, or the marital property is insufficient for the suitable support and maintenance of the other spouse. This could result in a house being returned to the spouse that brought it into the marriage, but the other spouse sharing in the increase in equity during the marriage.

Separate property may include assets a party owned before the marriage, gifts or inheritances, assets received after separation or filing, or assets or appreciation traceable to those items.  Inheritances are generally considered separate property if held in a separate bank account and not placed under joint control.

Property division, child support and spousal support are sometimes related. If a party needs support, a court might award a party more than half the assets; or include what might otherwise be considered separate property.

Look for an experienced divorce attorney who can help you navigate the many choices necessary to assist you in being adequately protected.  Pater Law is ready to help you achieve a fair result.

Stress and Coping with Divorce

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Divorce Lawyer

Every divorce is different and thus it is important that you determine what parts of that which follows applies to your circumstances. Even the best intentioned advice may be misplaced or even harmful, depending on your particular circumstances. In some cases, emotional or psychological problems or conflicts are so pronounced that professional help is required or advised. With those limitations, the following is offered in the hope that you may find it helpful.

Divorce is often an emotionally charged experience because bright dreams have been shattered; love has soured and turned into something that is often ugly. Memories may create strong emotions and it is natural to feel some pain. The first step to recovery is to acknowledge the reality that divorce is painful. Seek professional help if the pain becomes unbearable. There is nothing wrong with going to a doctor for physical pain; just as there is nothing wrong with going to a counselor for pain caused by the divorce process.

Recognize that the process of divorce has its high and low moments. There will be times when you feel like it is too much, other times you will feel that this is opening a new and better chapter in your life. The process may unexpectedly change course and you may be feeling fine and then something comes along and you again feel the pain. You should attempt to ensure that slowly, but steadily, you move in the right direction- toward a new life with low points that are not quite as severe.

Now may be the time to examine spiritual issues. Too often modern man lives as if the temporal and physical define life. The threat or reality of divorce may be the crisis leading you to a productive reevaluation of life’s priorities. If you wasted too much time, perhaps chasing after money, cheap thrills, or otherwise unrewarding sources of happiness, now may be the time to consider what really counts. Reevaluating life’s priorities may lead to a spiritual awakening. If you live in the Holland, Michigan area, I can provide you with referrals to spiritual counselors who would be happy to meet with you.

Healing often happens indirectly or serendipitously. One way to reduce your pain is to reduce the pain of your divorcing spouse by making your spouse feel listened to. You do it, not out of debt, because you don’t owe it to him or her. You may do it solely because it may be the right thing to do. In attempting to reduce the pain by listening, it helps to keep a few things in mind:

a. God gave you two ears and one mouth. To effectively listen, remember to listen more than you talk.
b. Get your spouse to talk and make him/her feel listened to. Regardless of how much your spouse has wronged you in the past; your spouse feels pain. By listening to your spouse’s pain, you may reduce your own pain. Do it because it is the thing you chose to do; you are taking control of your life.
c. In order to keep your spouse talking, don’t be defensive. If your spouse says something mean or insulting, don’t respond. Just get your spouse to keep talking. If you can agree with something he or she says, then you might do so. Improving communications will often reduce conflict and pain.
d. If your spouse really opens up, they may feel that you have changed drastically. If you try this several times, something may happen. That something may be a miracle.

Your behavior doesn’t have to be a simple stimulus-response reaction. Between the stimulus of your spouse’s behavior is your choice as to how you will interpret the behavior and your choice as to how you will respond. It may be easier to blame your behavior on your spouse, but, you have a choice to reflect and decide how you will respond.

Decide to make things better. At the appropriate time and after having lived with the pain and have sorted through many feelings, examine what you can do to actively minimize the pain in the divorce process. Some people become too comfortable living with the pain. You can choose to examine and attempt different coping mechanisms and psychological strategies intended to lead to increased health and happiness. In effect, you can choose to get on with your life.

Choose to be healthy. Reaching the point when you can choose to be happy can be a haphazard product of time or it can be a product of choice whereby you choose to live in a psychologically healthy way. In any event, don’t be too hard on yourself. Choosing to live in a healthy way doesn’t mean that you won’t occasionally do something stupid or counter-productive. You are aiming for improvement not instant perfection.

Be physically active. Simple physical exercise can be a refreshing temporary alternative to spending too much time considering your divorce or predicament. One psychiatrist once said that over 25% of all mental illness could be avoided with physical exercise and most people would agree that exercise can be therapeutic. An exercise plan does not have to be elaborate- a half hour walk per day can be a good start to both physical and mental health. Discover what works for you: walking, bicycling, lifting weights, swimming, team sports, even being outside in the sunshine – find something that is distracting and that reduces your stress and maybe even gives you a sense of accomplishment. You might find a variety of activities assist you in dealing with the stress of divorce.

Don’t increase the pain. Some divorces are much more painful than they need be. There are several ways to make an event more painful. Don’t think of the situation as being worse than it is, it is bad enough without blowing it up. The first way to increase the pain is by a subtle form of justification. After making a decision it is natural to search for and stress facts that support your decision. Psychologists refer to that as reducing cognitive dissonance – which in a divorce situation may mean repeatedly convincing yourself how bad or rotten your divorcing spouse really is. When those internal conversations go on too long, you can almost talk yourself into a depression or more commonly convince yourself that the marriage was much worse than it really was. In either event, you are making things worse than they need be. You don’t need to justify your situation by making yourself miserable. Accept the fact that both you and your spouse made mistakes and occasionally did things that shouldn’t have been done but the past is history. You are now living in the present and working towards a bright future.

Don’t be too responsible. You are not responsible for your spouse’s behavior and you shouldn’t attempt to control what you spouse is thinking or what he/she is doing. You are responsible to attempt to act in a manner that does not disgrace your name or make matters worse. If divorce is inevitable, let your spouse go. At the same time, also let your anger or need to control go. Learn forgiveness. Some things simply need to be forgiven. Your spouse hurt you and you feel the pain. When you are psychologically ready, you can choose to forgive. Sometimes forgiveness is not only the right morally but also psychologically. As Lewis Smedes the author of Forgive and Forget, Healing the Hurts We Don’t Deserve, points out, the failure to forgive often is more hurtful for the person who refuses to forgive than the person who has not been forgiven. The refusal to forgive and forget pain can lead to a destructive bitterness that can cause more pain for you than for your spouse.

Don’t be a victim. Today’s popular culture worships victims and too often we seek to be perceived as victims in as many situations as possible. Don’t allow the victim label to poison your emotions and prevent you from some level of success and happiness. Just because your marriage wasn’t eternally happy doesn’t mean that you must remain a victim or that you must remain 100% unhappy.

Don’t generalize the failure of your marriage. Some people feel that because they weren’t perfect in their marriage, they must be a failure in all of life. That is a cognitive distortion which David M. Burns, in his book Feeling Good, calls all-or-nothing thinking. It is related to the distortion of over generalization, which sees a single negative event as a never-ending pattern of defeat. Just because you are getting divorced doesn’t mean your whole life is forever ruined. This too will pass.

You are in control of your emotions. Solely because your spouse may hate you, doesn’t mean you have to hate yourself. You should attempt to take control of your emotions. As Albert Ellis and Robert A. Harper point out in their book, A New Guide to Rational Living, you must dispute the belief that you must feel loved or accepted by every significant person. You must also reject the hypothesis that human misery gets externally caused and that you have little or no ability to control your depression or self pity. Don’t buy into the notion that you are not responsible for your own emotions. If you want to feel sorry for yourself, do so. But when you get ready to be happy, be happy or at least a little happier almost every day. That can only come about if you make the decision to turn forward and to make the best of a bad situation.

Following the above advice is sometimes not easy. You must choose the path toward happiness that works best for you. That may include a combination of spiritual growth, reading good books, seeking psychological or spiritual counseling, vigorous exercise, listening to good music or joining a support group.

When the whole process is over, remember you still must be able to look at yourself in the mirror. Be sure your behavior meets with a reasonable standard of morality and decency. Don’t allow your emotions to cause you to do things which you will later regret or of which you will have reason to be ashamed. Codes of conduct and laws regulating behavior also apply when you are upset or disappointed. May God bless you as you attempt to do the right thing.

Spousal Support: Determining the Amount and Length; How Much and How Long?

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Divorce lawyer

For years Ottawa County was one of the outlier counties when it came to spousal support. Several years ago, a female judge from Ann Arbor might look at a set of facts and award $3,000.00 a month in alimony for an unknown period of years, and a judge from Ottawa County, looking at the same set of facts, might award $1,000.00 per month for two years. That disparity has been reduced significantly. Today Ottawa County judges award spousal support in amounts and similar to what other counties award.

The main purpose of awarding spousal support is to balance the incomes and needs of the parties without impoverishing either party. Spousal support “is to be based on what is just and reasonable under the circumstances of the case.”

Michigan Courts use the following factors when deciding the amount or length of spousal support: (1) the past relations and conduct of the parties, (2) the length of the marriage, (3) the abilities of the parties to work, (4) the source and amount of property awarded to the parties, (5) the parties’ ages, (6) the abilities of the parties to pay alimony; this can mean not only actual earnings, but the ability to earn income, (7) the present situation of the parties, (8) the needs of the parties, (9) the parties’ health, (10) the prior standard of living of the parties and whether either is responsible for the support of others, (11) contributions of the parties to the joint estate, (12) a party’s fault in causing the divorce, and as to fault, the relative value to be given fault and the extent to which particular actions are regarded as fault contributing to the breakdown of a marriage are issues calling for a subjective response left to the trial court’s discretion subject to the requirement that the distribution not be inequitable. (13) the effect of cohabitation on a party’s financial status, and (14) general principles of equity.

Sometimes the analysis is not extremely difficult. If one spouse raised the children and the other increased his or her earning potential through education or experience, then a Court will consider that the main purpose of awarding spousal support is to balance the incomes and needs of the parties without impoverishing either party. But, even then the Court must consider all the factors, and not just need.

When calculating child support the State supplies a child support manual and Guidelines that take much of the mystery out of the equation. Come to my office, answer a bunch of questions, I plug it all into a computer program and I can give you a fairly accurate estimate as to the amount of child support.

The same is not true for spousal support (alimony). I use two computer programs to assist me in calculating or estimating spousal support, but they only consider about four factors, not 14. Because they leave out so many of the factors, they offer only the most general idea or assistance in evaluating spousal support. It might be noted that a trial court’s refusal to admit the spousal support prognosticator report into evidence is error, but not necessarily reversible error. It should be further noted, that most trial courts know the inherent limitations of the spousal support prognosticators to use 4 and not 14 factors.

Weighing the factors is not a scientific endeavor. In fact, sometimes the unnamed factor, who is doing the evaluating (ie, who is the judge) is also a critical factor (factor 15?). Come trial day and, if to your surprise you wind up with a visiting judge, you attorney may need to discard prior evaluations or predictions.

It is important to have an attorney who knows the intricacies of spousal support and who knows the predilections of the local trial judges.

What to do if He Wants a Prenup: How is the Spouse with the Smaller Estate Protected?

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Divorce Lawyer

1.   What are you getting out of the prenuptial agreement? If it is all one-sided in favor of your prospective spouse, you should retain an attorney to negotiate some benefits for you.

2.   If the other side gets to keep his or her pension, 401-K and retirement benefits, what retirement benefits do you keep? Only those worth next to nothing? Retain an attorney so that you also get something out of the agreement.

3.   If the other side will increase his or her net worth, while you contribute by facilitating that growth, what offsetting assets will you be receiving?

Retain an attorney that not only knows how to draft a prenuptial agreement, but knows how to negotiate terms that benefit you. Even though you may not be in the driver’s seat, it should not be a take it or leave it proposition.

Ray has prepared prenuptial agreements for someone wishing to protect assets, and has also negotiated on behalf of the one presented with a proposed prenuptial agreement. In one recent case with limited assets, he negotiated an additional provision that resulted in Client being immediately named as the beneficiary of a retirement savings plan worth over $20,000.00.

Steps to Collecting

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Collections Lawyer
  1. Review file. Call debtor. Calendar file.
  2. Prepare demand letter; Send letter; Calendar file
  3. Call debtor. Calendar file.
  4. Prepare final demand letter. Calendar file.
  5. Final call to debtor.
  6. Consider if suit should be filed:

Evaluate collectability of Debtor.

Evaluate claim and potential defenses.

Evaluate proofs: witnesses, documents, admissions, etc.

  1. Prepare Summons, Complaint, affidavit, etc.
  2. File suit.
  3. Obtain service.
  4. If Defendant files Answer, skip to step ___ below.
  5. Calendar file for entry of default.
  6. Prepare default and default judgment if no Answer filed.
  7. Obtain entry of default and default judgment if no Answer filed.
  8. Calendar file for exercise of remedies.
  9. Further research as to Defendant’s assets.
  10. Prepare Writ of Garnishment, Subpoena on Discovery, or Request and Order to Seize.
  11. Calendar file for review.
  12. Etc.
  13. See also: http://www.wikihow.com/Collect-Small-Business-Debt

See also: http://www.entrepreneur.com/article/171228

Aggressively collecting debts: http://www.wikihow.com/Collect-Small-Business-Debt

How to Avoid Unnecessary Attorney Fees

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Divorce Lawyer

I have offered various suggestions as to how to reduce attorney fees in a divorce before. Being unreasonable, arguing over minor issues, and retaining the wrong attorney will increase attorney fees.

But there is one other approach to avoiding unnecessary attorney fees.

I recall sitting in a courtroom in the 57th District Court in Allegan several years ago. About six people were waiting to be sentenced. One asked the other why he was there. He replied, “He called me a mother _ _ _ _ _ _, I had to hit him.” All of the other convicted criminals vigorously shook their heads as they agreed with his statement. If that doesn’t strike you as strange, perhaps you will have a difficult time controlling your attorney fees.

Someone else’s behavior does not necessarily dictate how you are to behave. Between stimulus and response is a space, the freedom to think and decide. Victor Frankl put it this way: “Between the stimulus and the response is a space, and in this case lies our power and freedom.” Making good use of that space can significantly reduce your attorney fees and give your power and freedom to avoid many other problems. If you stoke the fires of conflict every time your divorcing spouse says or does something inappropriate, you are not making good use of that space between stimulus and response.

Recently, I had a client showed me some text messages between he and his wife. I had established a good relationship with my client so we could communicate openly. I hesitated a few seconds before explaining the concept of effectively using that space between stimulus and response to think before acting. Those text messages had been created during a period when my client was attempting to reconcile with his spouse. I explained to him that in 40 years of marriage the worst thing my wife had called me was something that most people would consider to be innocuous and not harmful. It certainly would not be considered foul or abusive. There should be a large pause button between the Stimulus and Response. Using that pause button between stimulus and response, can reduce your attorney fees and also reduce the chance of getting ulcers, having a stroke or becoming poor.

Using that space to pause and think won’t happen automatically. Prepare for that space. Contemplate how you want to live and how you want to be remembered. It may help you redefine who you are. Instead of it being Stimulus followed by Automatic Inflammatory Response, make it Stimulus (and then pause and reflect) and you may have a Considered Appropriate Response.   Pausing and biting the tongue become easier with practice. You can be responsible. See also and creating space in the practice of your life.

Collecting in a Judgment Obtained in a Different State

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Collections Lawyer

If a creditor obtains a Money Judgment in another State against someone who later moves to the Holland, Michigan area, what can the creditor do?

A. Nothing
B. Cry.
C. Domesticate the other State’s Judgment.

If you chose “C”, you made a good choice. Under the full faith and credit provision of the US Constitution, one State must recognize the judgment of another State. (The Full Faith and Credit Clause refers to Article IV, Section 1 of the United States Constitution, which addresses the obligation that States within US have to respect the “public acts, records, and judicial proceedings of every other State.”)

Thus, the Michigan Court must treat another State’s Judgment as good as its own.

To domesticate the other State’s judgment, it must first be authenticated by the Court that entered the original judgment (with a fancy stamp to indicate that it is a legitimate copy and not a fraud). The Michigan attorney then must sign an affidavit stating that the Judgment is in effect and the amount of the judgment without interest. 21 days after the Michigan Court has given notice of entry of the Foreign Judgment, the Michigan attorney can initiate post-judgment remedies such as garnishments seeking to collect the balance owed on the judgment.

We have handled numerous cases wherein a creditor who has a judgment from another State seeks to collect in Michigan and would be happy to assist you. Contact us by phone at 616.396.8883.

 

Collection Practices: A Creditor’s Perspective

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Collections Lawyer

CHOOSING CUSTOMERS OR CLIENTS

Sometimes the best decision that can be made about a prospective customer is to decline to provide goods or services. Standardized credit evaluations techniques need to be in place to analyze the credit worthiness of a prospective debtors and, to the extent that it does not violate state or federal credit regulations, also use your common sense or gut instincts. Don’t accept a prospective business transaction as worthwhile if it is likely that part of your costs will be the unreimbursed costs of attempting to get paid. Also some people, even if they timely pay, are more trouble to do business with than they are worth if they behave as if they are your only customer and frequently complain.

Often there may be a tension between an organization’s marketing/sales department and its credit department. Frequently, the sales staff wants to sell to everyone and credit only wants to sell to those who don’t need credit. There must be a balance that periodically gets reviewed.

Maintain Adequate Records

RETAIN COLLECTION INFORMATION. Make a photocopy of debtor’s check. Record the debtor’s employment information, social security number, and driver’s license number. The more of this type of information you maintain, the easier it is to collect if you have to turn the file over to your collection attorney. Most of this information should be collected initially; some may be collected as you do business with the debtor.

Developing adequate record keeping systems can go a long way in preventing bad debt from developing. Things you need to know:

a. The type of customers that are not paying. Determine if there is a particular branch or line of products or services that you provide that result in collection problems

b. Did something exist that should have caused you to decline the potential business relationship before the debt was incurred? If so, establish procedures to prevent future occurrences.

c. Could the debt have remained manageable if certain safeguards were in place? Was there a point when the debt should have been reviewed by the appropriate department before the debt became too large?

d. Carefully document the debtor’s promises. Often, it is advisable to send a short letter to the debtor specifying exactly what their promise was.

e. When payments are due. Maintain an adequate calendar so that the receipt of promised payments are reviewed on a timely basis. Be sure to notify your attorney if you receive direct payment on a file that was earlier referred to the attorney.

f. Maintain records for future. The client may return someday and documentation concerning complaints, payment history, etc. should be available before you again decide to do business with the client/customer or decide on the amount of a required deposit and credit limits.

Standardize billing and collection procedures

Collect as much as possible as quickly as possible, and maintain good relations with customers. At 30-60 days overdue, every debtor should receive a personal letter (see below) and a follow-up phone call. By 90 days overdue, it is safe to assume that the debtor doesn’t care about good relations and you should stop wasting time and discontinue offering additional credit and further minimize the costs and risks of collection by turning the file over to your collection attorney.

FORWARDING SERVICE REQUESTED. This should appear just beneath the return address on all envelopes you send to debtors. Without that request, bills will be forwarded to a debtor’s new address and you will not be notified that the debtor has moved. Ultimately, the forwarding information expires and you will have a stale address.

SPRA. Keep your collection letters short. Some experts recommend the SPRA approach: (Situation) Your account is past due. (Proposal) Your November payment needs to be made. (Reason for Response) You want to protect your credit rating. (Action-Deadline). Please pay by Wednesday, December 7, 2011.

ABIDE BY DEADLINES. If you tell a debtor that if they don’t pay by the 10th you will then refer the account to your attorneys, be sure your attorneys have that file shortly after the 10th. Debtors will not take you seriously if you demonstrate that your bark is worse than your bite.

a. 1st Overdue billing (30 days):

After an appropriate amount of time has passed for the client to receive the letter, follow up with a phone call to politely inquire about payment. Authorize appropriate person to enter into payment arrangement if payment in full is to be made within next 90 days. If longer, payment arrangement must be approved by supervisor. Always follow up with letter to confirm.

b. Second Overdue billing (60 days):

If no payment has been received by the next billing cycle, send second standard letter. Calendar each file for 10 days; if no payment has been received, call the customer personally. If payment agreement is reached, confirm this with standardized agreement letter.

c. Third Overdue billing (90 days):

If no payment has been received, send third standardized letter (to inactive customers only- there should be no active customers who continue to increase debt unless payment agreement has been reached and confirmed in writing).

Refer to collection attorney on timely basis.

A collection attorney will often get results where in house contacts have been unsuccessful. If your collection attorney works on an hourly basis you will have less reason to delay in turning the file over. As a general practice, never wait more than 90 days to refer the file to your collection attorney.

Close uncollectable files

It may be painful to accept, but some accounts are simply uncollectable. Take your losses and center your attention on files that you believe may pay off. If you work uncollectable accounts, you will inevitably not place the appropriate emphasis on working collectible accounts with the diligence they deserve. Close uncollectable files, especially if the amount is small. Spend time working files that have enough at stake and where the debtor appears to be collectable. Don’t hold the file too long before referring to a collection attorney. Chances of successful collection reduce with the passage of time.

Choosing a collection attorney

One way to avoid bad debt is to have your attorney review your initial contract with your customers/clients. A properly drafted contract may help avoid later problems and reduce the costs of collection by including entireties language, venue provisions, and procedures for objecting to the alleged inaccuracy of invoices.

This office generally works only on an hourly basis so that you are more likely to turn over files before they are stale and while the chances of collection are still reasonably high. Otherwise you may be tempted to retain the file too long because you are attempting to avoid paying 30 -50% to an attorney or collection agency.

Once we have an ongoing relationship with a client we will develop a good feel for how the client wants its debtors treated. That helps us when speaking to debtors by attempting to resolve the case in a manner our client will be happy with. Except with specific authorization, we will not settle your case. Therefore, we will contact our client before accepting a settlement proposal or payment plan.

Because collections are a major part of our practice, we know collection law and will abide by deadlines. An attorney who does not give prompt attention to your collection accounts may do more harm than good by not aggressively pursuing collection while you have discontinued your collection efforts because you have turned the file over. Additionally, an attorney who is not familiar with the technicalities of the Federal and State laws pertaining to debt collection may expose you to civil liability.

Choosing a Collection Attorney

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Collections Attorney

One way to avoid bad debt is to have your attorney review your initial contract with your customers/clients. A properly drafted contract may help avoid later problems and reduce the costs of collection by including entireties language, venue provisions, and procedures for objecting to the alleged inaccuracy of invoices.

This office generally works only on an hourly basis so that you are more likely to turn over files before they are stale and while the chances of collection are still reasonably high. Otherwise you may be tempted to retain the file too long because you are attempting to avoid paying 30 -50% to an attorney or collection agency.

Once we have an ongoing relationship with a client we will develop a good feel for how the client wants its debtors treated. That helps us when speaking to debtors by attempting to resolve the case in a manner our client will be happy with. Except with specific authorization, we will not settle your case. Therefore, we will contact our client before accepting a settlement proposal or payment plan.

Because collections are a major part of our practice, we know collection law and will abide by deadlines. An attorney who does not give prompt attention to your collection accounts may do more harm than good by not aggressively pursuing collection while you have discontinued your collection efforts because you have turned the file over. Additionally, an attorney who is not familiar with the technicalities of the Federal and State laws pertaining to debt collection may expose you to civil liability.

Collecting Accounts with Numerous Transactions

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Collections Lawyer

Clients sometimes ask: “How are we going to prove all these separate individual purchases when we don’t have any independent recollection of each separate transaction?”

Creditors are helped by a statute that provides that a creditor does not have to prove each separate purchase, only that the debtor was presented with a copy of an account and the debtor failed to object to the account’s inaccuracy thereby creating an account stated. It then becomes an implied agreement, between parties who have had previous transactions of a monetary character, that the account representing such transactions are true and that a balance struck is correct, together with a promise, expressed or implied, for payment of the balance. Leonard Refineries, Inc. v. Gregory, 295 Mich 432 (1940). The essential element is a statement of account, or a striking of a balance between the parties on a settlement.

The theory of an account stated is that the minds of the parties have met when an account has been rendered by one and received and accepted without objection by the other. Love v. Ramsey, 139 Mich. 47 (1905). An account may be stated between any parties who have had previous transactions, or even a single transaction of a monetary character. Thomasma v. Carpenter, 175 Mich. 428 (1913). However, there must have been a prior dealing between the parties that resulted in an antecedent debt or demand between the parties concerning which a balance is struck. Fellows v. Thrall, 85 Mich. 161 (1891). If there has been a balance struck between the parties on the settlement, the nature of the original transaction is generally immaterial. Albrecht v. Gies, 33 Mich. 389 (1876). It may have been for the sale of land or other property or for services. Stevens v. Tuller, 4 Mich. 387 (1857).

An account stated need not be in any particular form, but it is sufficient if there is disclosed some existing antecedent debt or demand between the parties respecting which a balance was struck. Albrecht v. Gies supra. Typically, it is in the form of a statement of account to a debtor, which the debtor endorses as correct.

The items constituting the account need not be shown. A writing is unnecessary, for a transaction may become an account stated by oral settlement, without any written undertaking or acknowledgment, and may be proved by unsigned writings. Watkins v. Ford, 69 Mich. 357 (1888).

Whether the parties have assented to a sum as the correct balance due from one to the other depends upon the circumstances. Kaunitz v. Wheeler, 344 Mich. 181 (1955). Assent may be shown by an expressed understanding, or by words or acts in the necessary improper references to be drawn from it. Consequently, assent is shown by (1) a debtor’s endorsement on a statement of account of its correctness, (2) by giving credit for the amount of the account on a bill rendered by the debtor, or (3) by making payments on the account without objection. Bewick v. Butterfield, 60 Mich. 203 (1886); Corey v. Jaroch, 229 Mich. 313 (1924). It may even arise by failure of a debtor to object within a reasonable time to statements of account rendered to him. Hawley v. Professional Credit Bureau, Inc. 345 Mich. 500 (1956).

An account stated that conforms to the legal requirements may only be impeached for fraud or mistake. The burden of proof is on the one who seeks to impeach an account stated for fraud or mistake.