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Debt Collectors Are Transforming the Business of State Courts

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Re: Debt Collectors Are Transforming the Business of State Courts

#91

Post by beervirus »

joshuaheard wrote: post #80

I do commercial collections (B2B). The article states, "Unlike most court rulings, these judgments are issued, as the name indicates, by default and without consideration of the facts of the complaint—and instead are issued in cases where the defendant does not show up to court or respond to the suit." I am licensed in California and Texas, and in both states one must "prove-up" a default before judgment is entered b…

I was under the impression that a well-plead complaint was sufficient if the defendant doesn't show up. What rule says you have to actually put on a case to get a default judgment?

Re: Debt Collectors Are Transforming the Business of State Courts

#92

Post by pnw_hazor »

Many debt collection cases will disappear if the alleged debtor files an answer (in court) to a debt collection complaint.

Filing answers is relatively simple and doesn't cost anything.

Depending on the jurisdiction, filing an answer basically puts the brakes on the case because it is not worth it for the debt collector to pursue it any further. Their business model is based on default judgments.

Eventually, after a year or so, if no action has been taken, the court is likely to dismiss the case (or you can ask them to).

Also, debt collection law has a lot of federal consumer protections and often more protections at the state level. Thus, it is not uncommon to run into debt collectors that are violating fed or state laws. Raising such issues also makes the case go away.

Of course, your mileage may vary depending on local laws and the nature of the debt or contract breach. But when I practiced little people law (before I sold out and went into IP law) I did this a few times and it worked without issue.

Thinking about it now, I guess a debtor-side lawyer should be involved, but defending such cases require hardly any effort on the part of the lawyer, so again I wonder why there are not debt relief orgs doing this. I believe fighting back just a little would significantly reduce the predatory practices of the volume debt collectors.

I imagine debt relief agencies don't fight because I think many are funded by the credit industry. So they direct debtors into payment plans rather than trying to shut down the predators.

Re: Debt Collectors Are Transforming the Business of State Courts

#93

Post by cwhiz »

Aloha wrote: post #20

The single largest thing we can do is undo the changes to bankruptcy law signed in 2005, it removed bankruptcy as a tool of the poor to discharge excess debt. It's caused there to be very little downside to lending, and lead to an explosion of debt.

The outcome of that will be that lending standards go up substantially. Significantly higher interest rates and required collateral. The eventual end result is fewer people able to qualify to buy a car, buy a house, get a credit card, or go to college. These are significant drivers of economic activity.

It's hard to put the genie back in the bottle.

Re: Debt Collectors Are Transforming the Business of State Courts

#94

Post by joshuaheard »

beervirus wrote: post #91
joshuaheard wrote: post #80

I do commercial collections (B2B). The article states, "Unlike most court rulings, these judgments are issued, as the name indicates, by default and without consideration of the facts of the complaint—and instead are issued in cases where the defendant does not show up to court or respond to the suit." I am licensed in California and Texas, and in both states one must "prove-up" a default before judgment is entered b…

I was under the impression that a well-plead complaint was sufficient if the defendant doesn't show up. What rule says you have to actually put on a case to get a default judgment?

In California, it's CCP 585.

https://leginfo.legislature.ca.gov/faces/codes_displaySectio....

It's a two step process. First your get the default entered if they don't respond, then you ask for judgment for damages. Maybe that's where the confusion lies. The default is entered by request almost automatically if they don't respond. Getting your judgment for damages requires evidence to prove your case.

Re: Debt Collectors Are Transforming the Business of State Courts

#95

Post by derekp7 »

verylittlemeat wrote: post #90
netcan wrote: post #88

Earlier quoted context omitted.

Exactly the point. To win, they need to cross all the Ts you mention. OTOH, they can also win if the defendant no-shows. At the bottom end of the debt collection pool, one strategy is to buy debt with a high chance of no-show and win cases that way... no need for meticulous and expensive lawyering. If people aren't answering their phones or opening any official looking mail... It's not the only strategy, but it is on…

In order to have a default judgment against a person they must be served (aware of the situation). If you're being told "show up to court or face a negative outcome" and you do nothing then whose fault is that? You took on the debt. You decided not to show up in court. Are debtors just never accountable for their actions? Also to quote a comment by a lawyer in this thread >I am licensed in California and Texas, and i…

What if you don't owe the debt, however you are hit with dozens of summons to show up to different courts for different supposed debts? How is it fair to force a totally innocent person to take time off of work, possibly hire a lawyer, in order to not have a default judgement against them from a shady debt collector?

Re: Debt Collectors Are Transforming the Business of State Courts

#96

Post by netcan »

verylittlemeat wrote: post #78
netcan wrote: post #68

Earlier quoted context omitted.

No. This isn't a rhetorical example. Most defendants don't know anything about the case. They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. For their part, the agencies tend towards sloppiness. Some debt sells at Thinking about this is a matter of justice is ridiculous. It's not a justice driven process, it's an economics driven process. The agencies…

>They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. OK but with the exception of fraud and incorrect identity then the rest of the people have a real original debt right? The debt might be sold at a fraction of it's original amount but that's because the debt collector takes a risk to put in time and legwork in exchange for collecting a real legal deb…

..probably, unless by accident. They lose when a defendant shows up because they're not prepared to win a contested case.

Re: Debt Collectors Are Transforming the Business of State Courts

#97

Post by pnw_hazor »

netcan wrote: post #14

There have been journalists & researchers who covered these debt collectors at court. When defendants showed up, organised, they usually won. The debt collectors' lawyers didn't arrive prepared to win, because most people didn't show up. If you can win 85% of cases just by showing up, why bother. A court system that allows these dynamics to dominate isn't serving well.

In little people law, such as, debt collection, landlord tenant, family law, some bankruptcy/creditor issues, it usually doesn't take much effort to disrupt the volume practitioners.

The volume-based attorneys often exclusively practice in one area and rarely face an attorney. The few times I defended people, it really threw a monkey wrench into the process.

Unfortunately, there is no money in being a white knight in most areas of little people law.

Re: Debt Collectors Are Transforming the Business of State Courts

#98

Post by ensignavenger »

verylittlemeat wrote: post #78
netcan wrote: post #68

Earlier quoted context omitted.

No. This isn't a rhetorical example. Most defendants don't know anything about the case. They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. For their part, the agencies tend towards sloppiness. Some debt sells at Thinking about this is a matter of justice is ridiculous. It's not a justice driven process, it's an economics driven process. The agencies…

>They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. OK but with the exception of fraud and incorrect identity then the rest of the people have a real original debt right? The debt might be sold at a fraction of it's original amount but that's because the debt collector takes a risk to put in time and legwork in exchange for collecting a real legal deb…

Fraud in debt collection is rampant. Yes, there are legitimate debtors, but you can't assume than some one who is being sued legitimately owes the debt. Even without fraud, many debt collectors illegally harass the debtors, knowing they can't afford a lawyer to defend themselves.

Re: Debt Collectors Are Transforming the Business of State Courts

#99

Post by lsaferite »

inetknght wrote: post #79
oh_sigh wrote: post #40

Earlier quoted context omitted.

What if you buy up the debt of rich people who can, but don't want to pay?

Rich people have unserviced debt? Wouldn't that make them poor people?

That would make them highly leveraged people. /s (kinda)

Re: Debt Collectors Are Transforming the Business of State Courts

#100

Post by verylittlemeat »

derekp7 wrote: post #95
verylittlemeat wrote: post #90

Earlier quoted context omitted.

In order to have a default judgment against a person they must be served (aware of the situation). If you're being told "show up to court or face a negative outcome" and you do nothing then whose fault is that? You took on the debt. You decided not to show up in court. Are debtors just never accountable for their actions? Also to quote a comment by a lawyer in this thread >I am licensed in California and Texas, and i…

What if you don't owe the debt, however you are hit with dozens of summons to show up to different courts for different supposed debts? How is it fair to force a totally innocent person to take time off of work, possibly hire a lawyer, in order to not have a default judgement against them from a shady debt collector?

Sure that aspect of debt collection can be improved and is a clear injustice. How many debt collections are of that nature vs people with real lapsed unsecured debt though? If i had to guess not nearly as many.

I'm mostly taking issue with people who are threatened with a default judgment for a real debt but pretend it isn't happening and then turn around and cry abuse by the system.

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