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1.4.9.1 Number of Debt Collection Lawsuits and Costs of Filing

In the CFPB’s survey of consumer experiences with debt collection, fifteen percent of survey respondents who reported being contacted about a debt said that they had been sued by a creditor or debt collector in the previous year.336 Since the CFPB estimated that more than seventy million Americans were contacted by a creditor or debt collector about a debt in collection in the prior year,337 this would mean that more than ten million Americans were sued on a debt during that one-year period.338

The National Center for State Courts (NCSC) conducted a study “of all non-domestic civil cases disposed between July 1, 2012 and June 30, 2013 in 152 courts with civil jurisdiction in 10 urban counties.”339 This study found that sixty-four percent of all civil filings were contract cases, which consisted primarily of debt collection (thirty-seven percent), landlord/tenant (twenty-nine percent), and foreclosure (seventeen percent).340 Moreover, an additional sixteen percent of civil cases were small claims cases for $12,000 or less, many of which were “lower-value debt collection cases.”341 Summarizing its findings, the NCSC wrote that:

“The vast majority of civil cases that remain in state courts are debt collection, landlord/tenant, foreclosure, and small claims cases. State courts are the preferred forum for plaintiffs in these cases for the simple reason that in most jurisdictions state courts hold a monopoly on procedures to enforce judgments. Securing a judgment from a court of competent jurisdiction is the mandatory first step to being able to initiate garnishment or asset seizure proceedings.”342

Subsequent reports by the NCSC estimated that there were 15.4 million civil cases filed in state courts in 2015, of which fifty-one percent were contact cases and sixteen percent were small claims cases.343

Other studies have also found that state courts are inundated with high volumes of collection lawsuits.344

Lawsuits by debt buyers are a significant driver of the number of debt collection actions in state courts. Research by ProPublica highlighted the dramatic growth in judgments by debt buyers in New Jersey345 and in lawsuit filings in Miami-Dade County346 and three counties in Missouri.347 Other research has highlighted that cases filed by debt buyers make up a significant portion of the lawsuits filed in specific jurisdictions.348 Government consent orders refer to hundreds of thousands of lawsuits filed by certain debt buyers,349 and an analysis of 10-K filings by Encore Capital Group, Portfolio Recover Associates, and Square Two Financial concluded that “together [they] collected over one billion dollars annually in revenues from litigation” in 2013, 2014, and 2015.350

Footnotes

  • 336 Consumer Fin. Protection Bur., Consumer Experiences with Debt Collection: Findings from the CFPB’s Survey of Consumer Views on Debt 27 (Jan. 2017).

  • 337 Consumer Fin. Prot. Bureau, CFPB Survey Finds Over One-In-Four Consumers Contacted By Debt Collectors Feel Threatened (Jan. 12, 2017).

  • 338 70 * 0.15 * 100 = 10.5.

  • 339 Paula Hannaford-Agor, et al., The Landscape of Civil Litigation in State Courts, at iii (Nat’l Center for State Courts, 2015) (“The 925,344 cases comprise approximately five percent (5%) of state civil caseloads nationally.”).

  • 340 Id. at 17, 19.

  • 341 Id. at 17.

  • 342 Id. at v.

  • 343 Nat’l Center for State Courts, Examining the Work of State Courts: An Overview of 2015 State Court Caseloads (2016).

  • 344 See Mary Spector and Ann Baddour, Collection Texas-Style: An Analysis of Consumer Collection Practices in and out of the Courts, 67 Hastings L.J. 1427, 1446 (2016), citing Tex. Office of Court Admin., Annual Statistical Report for the Texas Judiciary: Fiscal Year 2015, p. 44 (2015) (in fiscal year 2015, 170,409 lawsuits were filed statewide in Texas to collect a debt); Paul Kiel, For Nebraska’s Poor, Get Sick and Get Sued, ProPublica, Apr. 28, 2016 (in Nebraska, approximately 79,000 debt collection lawsuits were filed in 2013, and in New Mexico, 30,000 suits were filed); Annie Waldman & Paul Kiel, Racial Disparity in Debt Collection Lawsuits: A Study of Three Metro Areas, ProPublica, Oct. 8, 2015 (during a five year period there were 116,289 judgments in debt collection lawsuits in St. Louis City and County, Missouri; 278,566 in Cook County, Illinois; and 128,918 in Essex County, New Jersey); Jessica Mendoza, et al., Collection claims abuses move up to higher courts, Boston Globe, Mar. 28, 2015 (from 2004 to 2013, at least 1.2 million cases were filed in Massachusetts small claims and district court sessions by professional debt collectors); Peter A. Holland, Junk Justice: A Statistical Analysis of 4,400 Lawsuits Filed By Debt Buyers, 26 Loy. Consumer L. Rev. 179 (2014) (reporting that debt buyers filed 40,796 lawsuits in 2009; 43,581 in 2010; 37,202 in 2011; 22,566 in 2012; and 24,317 in 2013); Susan Shin and Claudia Wilner, The Debt Collection Racket in New York (New Economy Project, June 2013) (reporting that debt collectors filed 195,105 lawsuits against New Yorkers in 2011); Claudia Wilner and Nasoan Sheftel-Gomes, Debt Deception: How Debt Buyers Abuse the Legal System to Prey on Low Income New Yorkers (Neighborhood Economic Development Advocacy Project, 2010) (“In New York City, debt collectors filed approximately 300,000 lawsuits per year between 2006 and 2008.”).

  • 345 Paul Kiel, So Sue Them: What We’ve Learned About the Debt Collection Lawsuit Machine, ProPublica, May 5, 2016 (court judgment data from New Jersey shows that debt buyers obtained 489 judgments on collection suits filed in 1996 compared to 112,296 in 2011, while collection judgments by major banks increased from 11,275 to 47,450, and collection judgments by all other plaintiffs declined from 106,032 to 73,128 during that same period; judgments by debt buyers were highest in 2008 with 140,103, and highest for banks in 2010 with 78,503).

  • 346 Id. (lawsuits in Miami-Dade County in Florida increased from 2932 in 2000 to 14,641 in 2014; lawsuits by debt buyers were highest in the 2008 at 28,712).

  • 347 Id. (lawsuits by debt buyers in three Missouri counties increased from 1768 in 2001 to 10,298 in 2013; lawsuits by debt buyers were highest in the 2008 at 15,231).

  • 348 See, e.g., Testimony of April Kuehnhoff, National Consumer Law Center, Before the Massachusetts Joint Financial Services Committee In support of S.120/H.2811, An act relative to fairness in debt collection (Sept. 25, 2017) (in 2015 in Massachusetts, lawsuits by nine debt buyers made up 43 percent of civil, small claims, and supplementary process filings); Paul Kiel, So Sue Them: What We’ve Learned About the Debt Collection Lawsuit Machine, ProPublica, May 5, 2016 (in three counties in Missouri in 2013, debt buyer filings accounted for 42% of lawsuits in 2013). Chris Albin-Lackey, Rubber Stamp Justice: US Courts, Debt Buying Corporations, and the Poor 15 (Human Rights Watch, Jan. 2016) (in New York state, debt buyers were four of the top ten filers in 2014; of these four, Midland Funding was the highest volume filer in the state with 22,731 lawsuits, followed by Portfolio Recovery with 21,356); Susan Shin and Claudia Wilner, The Debt Collection Racket in New York 3 (New Economy Project, June 2013) (in 2011 in New York, debt buyers filed more than half of the 195,105 collection lawsuits), available at www.neweconomynyc.org; Portfolio Acquisitions, L.L.C. v. Feltman, 909 N.E.2d 876 (Ill. App. Ct. 2009) (brief of amici curiae Legal Assistance Found. of Metro. Chi., Nat’l Ass’n of Consumer Advocates, and Am. Ass’n of Retired Persons in support of defendant-appellee) (analysis of over 150,000 collection actions filed in Cook County, Illinois, in one year found that more than half were filed by debt buyers).

  • 349 In re Encore Capital Group, No. 2015-CFPB-0022 (C.F.P.B. Sept. 9, 2015) (consent order), available at www.consumerfinance.gov (“Encore has filed hundreds of thousands of lawsuits to collect Consumer Debt.”); In re Portfolio Recovery Assoc., No. 2015-CFPB-0023 (C.F.P.B. Sept. 9, 2015) (consent order), available at www.consumerfinance.gov (“In 2012 alone, PRA’s internal and external counsel filed over 160,000 Debt Collection Lawsuits in state and local courts.”).

  • 350 Lisa Stifler, Debt in the Courts: The Scourge of Abusive Debt Collection Litigation and Possible Policy Solutions, Harvard Law and Policy Review Vol. 11-1, at 98 (2017).