Talk Justice, an LSC Podcast: The Rise of Consumer Debt Suits at the Cost of Low-Income Americans
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Carl Rauscher
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WASHINGTON—Experts discuss how consumer debt suits have come to dominate civil courts, often to the detriment of low-income Americans, on the latest episode of LSC's “Talk Justice” podcast released today. Jason Tashea, a member of LSC’s Emerging Leaders Council, hosts the conversation with guests Erika Rickard, project director for civil legal system modernization at the Pew Charitable Trust; Ariel Levinson-Waldman, founding president of Tzedek DC; and George Simons, founder and CEO of SoloSuit.
From 1993 to 2013, debt suits filed in the U.S. more than doubled from an estimated one in nine civil cases to one in four. The cases are usually brought by debt buying companies suing unrepresented individuals for sums less than $10,000.
Levinson-Waldman describes the ways in which billion-dollar debt collection corporations profit from these lawsuits against economically marginalized Americans as a “weaponization of the courts.”
“The business model that has sprung up is to essentially exploit the fact that there is no right to counsel in civil cases, and to assume and hope that most people will be steamrolled into not participating at all—therefore creating a default judgment that allows the debt collector to now be able to garnish wages and register that judgment with credit reporting agencies and tank people's economic futures,” Levinson-Waldman explains.
Simons founded the legal tech company SoloSuit to help self-represented litigants avoid default judgments by guiding them through processes like filing and answering document requests and properly responding to the lawsuit. Providing this knowledge to people facing debt suits can help them overcome the biggest barriers to winning their case.
“We find a lot of cases just get dismissed right off the bat once an answer is filed—maybe around 50% of cases just get dismissed—and that matches with the Consumer Financial Protection Bureau’s research that shows around 50% of the time, people say they are being sued for a debt they don't owe,” Simons says. “If somebody actually files an answer, the debt collector [sometimes] can't prove they owe the debt, or they might just be suing the wrong person and the case gets dismissed.”
While debt collection companies maximize their profits in this system, the courts have not yet adapted to prevent the continuing growth of these businesses or enable a more equitable court process for the consumer.
“The court system has not caught up to today's reality of what these debt collection cases, eviction cases and an increasing share of other kinds of civil court cases really look like,” says Rickard. “So the kinds of steps that a court can take to ensure that all parties are aware of what's happening, and that they know what is supposed to happen next, and that the court can review the validity of a claim—even if a defendant isn't present—those kinds of steps are only now starting to be taken by a handful of states and jurisdictions around the country.”
Talk Justice episodes are available online and on Spotify, Stitcher, Apple and other popular podcast apps. The podcast is sponsored by LSC’s Leaders Council.
Future episodes of the podcast will cover new data on America’s justice gap and explore the historic relationship between LSC and the American Bar Association.