Short answer: Start with a firm demand letter, since many unpaid invoices get paid at that stage. If not, Michigan small claims court handles claims up to $7,000 without lawyers. Larger claims go to district court (up to $25,000) or circuit court. The right choice depends on the amount, your paperwork, and whether the customer can actually pay.

You did the work or delivered the goods, and the customer stopped answering. Here's how Michigan businesses usually get paid, from cheapest to most involved.

Option 1: A demand letter

A clear letter that lists the invoices, the amount owed, any late fees or interest the contract allows, and a firm deadline. It's fast and inexpensive, and it creates a paper trail. A letter on a law firm's letterhead often gets a response when your emails didn't.

Best for: customers who can pay but are stalling, and any amount where you want to avoid court costs.

Option 2: Small claims court (up to $7,000)

Filed in the district court where the customer lives or does business, or where the deal happened
No lawyers and no jury. A business can appear through an owner, officer or employee.
Low filing fees and a hearing within a few months
The trade-off: there's no appeal if a district judge decides the case, and the customer can ask to move the case to regular court

Best for: smaller, simple invoices with good paperwork.

Option 3: A lawsuit in district or circuit court

For claims over $7,000, or when you want a lawyer handling it, a collection lawsuit is filed in district court (up to $25,000) or circuit court (over $25,000). A few tools help businesses here:

Affidavit of account: under Michigan law (MCL 600.2145), a sworn statement of the account attached to the complaint can shift the burden to the customer to deny the debt under oath.
Attorney fee clauses: if your contract or terms have one, the customer may have to pay your legal fees.
Default judgments: many debtors never respond, which leads to a quick judgment.

Getting a judgment is half the job

A judgment gives you collection tools: garnishing bank accounts and wages, liens on property, and court-ordered examinations of the debtor's assets. Before you spend money suing, ask: does this customer have a bank account, receivables, or property we can reach? If not, a payment plan may beat a judgment.

Don't wait too long. In Michigan, most breach of contract claims must be filed within six years, and claims for the sale of goods generally within four. But the older a debt gets, the harder it is to collect.

Prevent the next one

Good terms make collection easier: a signed agreement, clear payment terms, late fees, interest, an attorney fee clause, and a personal guarantee when you're extending credit to a small company. We draft those too.

Learn more about our business dispute practice, or read what to do if you're the one being sued.

Owed money by a customer?

Tell us the amount and send the invoices. We'll tell you the most cost-effective way to get paid. نتكلم العربية.

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Attorney responsible for this content: Ali Moubarak (P81729), Moubarak Law Firm, P.C., 1 Parklane Blvd., Ste 729 E, Dearborn, MI 48126 · (313) 566-4802.

Attorney advertising. This article is general information, not legal advice, and laws change. Every case is different, and results in past cases do not guarantee a similar outcome. Contacting us does not create an attorney-client relationship.