Michigan Supreme Court to Review Debt Collection Practices Following Home Seizure Case

Chelsea Koetter has petitioned the Michigan Supreme Court to declare the state's debt collection practices unconstitutional after her family home was seized due to unpaid property taxes. In 2021, Manistee County took ownership of Koetter's home, which she shared with her two sons, over a debt totaling $3,863.40, including taxes, penalties, and fees. This case echoes a previous ruling by the Michigan Supreme Court in favor of Uri Rafaeli, whose home was similarly seized and sold, with the government retaining all proceeds. The issue gained national attention when the U.S. Supreme Court ruled last year that Hennepin County, Minnesota, violated constitutional rights by seizing a home over a property tax debt and keeping the profits from its sale. Chief Justice John Roberts highlighted the injustice of a taxpayer losing a home worth significantly more than the debt owed, emphasizing that such actions represent a disproportionate contribution to public finances. In her complaint, Koetter outlines the complicated process homeowners must navigate to reclaim any surplus from the sale of their properties after foreclosure. She argues that the system is designed to disadvantage those who may not be familiar with the legal requirements, as she herself missed a crucial deadline due to a lack of understanding of the process. Koetter's case raises critical questions about the fairness of government debt collection methods, with her assertion that these practices amount to a form of legalized theft, calling for a reevaluation of how such debts are enforced.