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Highlight Updates Default Judgments

When consumers do not appear in court for their collection lawsuits, the creditors that filed the lawsuits may be able to obtain default judgments—often without presenting any evidence and despite the fact that consumers may have legitimate defenses.

In the Consumer Financial Protection Bureaus’ nationally representative survey of consumer experiences with debt collection, seventy-four percent of respondents who had been sued on a debt reported that they did not attended the court hearing.355 In the CFPB’s study of third-party debt buyers, respondents reported obtaining default judgments in sixty to ninety percent of their filed suits.356 Research by other groups confirms that a very high rate of consumers do not respond to collection lawsuits357 and that a high percentage of these collection lawsuits end in default judgments.358 One study found that the rate of default judgments was higher for collection lawsuits brought by debt buyers than it was for other collection lawsuits.359

A scathing report by Human Rights Watch highlighted the role of the courts in issuing such a high volume of default judgments:

Many courts routinely award default judgments to debt buyers . . . without scrutinizing the claims at issue. One Arizona justice of the peace aptly described this to Human Rights Watch as a “greased rail” process. Many individual courts issue thousands or even tens of thousands of no questions asked default judgments in favor of debt buyers every year.360

High default rates contribute to fast disposition times, enabling the court to churn through the high volume of collection lawsuits.361 The National Center for State Courts found that ninety-one percent of debt collection contract cases were disposed of within 180 days.362

Consumer default does not mean that the consumer owes the debt. The consumer may never have received actual notice of the hearing363—potentially only learning of the collection action when wages or bank account are garnished to pay the default judgment—or may not have understood the notice that they received. They may not understand how to respond to the summons, feel intimidated by the legal process, fear deportation if they appear in court, be unable to access legal advice/representation, or think that appearing in court will not make any difference. Consumers who are elderly, ill, lack child care, have no transportation, or are unable to take time off of work also face barriers to appearing at the courthouse.


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

  • 356 Consumer Fin. Protection Bur., Study of third-party debt collection operations, 18 (July 2016) (not including jurisdictions where the defendant’s appearance in court is necessary before the court will enter a default judgment).

  • 357 Peter Holland, Junk Justice: A Statistical Analysis of 4400 Lawsuits Filed by Debt Buyers, 26 Loy. Consumer L. Rev. 179, 226 (2014) (comparing the results of seven prior studies between 1967 and 2010 and finding that between 70% and 94% of consumers “failed to respond” to collection lawsuits). See also Fed. Trade Comm’n, Repairing a Broken System 7 (July 2010) (“panelists from throughout the country estimated that sixty percent to ninety-five percent of consumer debt collection lawsuits result in defaults, with most panelists indicating that the rate in their jurisdictions was close to ninety percent”; collecting studies).

  • 358 See, e.g., Ellen Harnick, Lisa Stifler, and Safa Sjadi, Debt Buyers Hound Coloradans in Court for Debts They May Not Owe (Center for Responsible Lending, Dec. 2016) (“A review of 375 randomly selected cases filed by four debt buyers in the county courts in five Colorado counties from 2013 through 2015 revealed that 71 percent of the cases resulted in default judgments against the individuals sued.”); Mary Spector and Ann Baddour, Collection Texas-Style: An Analysis of Consumer Collection Practices in and out of the Courts, 67 Hastings Law Journal 1427, 1449 (2016) (in analysis of data for 40 Texas counties for fiscal year 2015, 31.6% of cases ended with default judgment); Susan Shin and Claudia Wilner, The Debt Collection Racket in New York, 3 (New Economy Project, June 2013) (42% of debt collection lawsuits in New York state resulted in default judgments); Mary Spector, Debts, Defaults, and Details: Exploring the Impact of Debt Collection Litigation on Consumers and Courts, 6 Va. L. & Bus. Rev. 257, 296 (2011) (39.46% of served cases in Dallas County ended with a default judgment for the plaintiff); Claudia Wilner & Nasoan Sheftel-Gomes, Debt Deception: How Debt Buyers Abuse the Legal System to Prey on Low Income New Yorkers 6 (Neighborhood Economic Development Advocacy Project, 2010) (study of 336 cases filed by debt buyers in New York City found that 81% resulted in default judgments).

  • 359 Susan Shin and Claudia Wilner, The Debt Collection Racket in New York 3 (New Economy Project, June 2013) (“Overall, 42% of debt collection lawsuits resulted in default judgments—but debt buyers obtained default judgments in an estimated 62% of their cases.”).

  • 360 Chris Albin-Lackey, Rubber Stamp Justice: US Courts, Debt Buying Corporations, and the Poor (Human Rights Watch, Jan. 2016).

  • 361 See §, supra.

  • 362 Paula Hannaford-Agor, et al., The Landscape of Civil Litigation in State Courts 30 (Nat’l Center for State Courts, 2015).

  • 363 This may be due to problems such as fraudulent claims of services by the process server (also known as “sewer service”) or mail service to the wrong address. See National Consumer Law Center, Collection Actions § (4th ed. 2017), updated at