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.

There has to be a way to apply some kind of scaling to this kind of defense..

Not if you must have a lawyer admitted to the State Bar with a three year JD to pay off. Paralegals can do 99% of the work and have a lawyer review it, sign off on it and be liable for documentation but everything but a lawyer or representing yourself in court is illegal in the US.

No bicycles, motor bikes or Hondas. If you can’t afford a Mercedes you can walk.

Hard to scale up a defense if you can't even get the debtors to do the bare minimum of showing up to court.

Like classes of people...

Useful in some situations, but generally limited by consumer contracts and because people with damages arising out of different circumstances are hard to group into a class.

And it only gets to court after harassment hasn't worked. Anecdata: guy I know had a common name. Debt collector fastened on him because he'd lived in the same town as a deadbeat with that name too. Guy would call day and night demanding payment.

We were on the receiving end of that when the debtor in question registered our phone number when she signed up for a CVS card. It took awhile to figure it out, but every time we picked up something there, we would get increasingly crazy calls from debt collectors and insurance subrogation people.

It got worse over time as the collection agencies sell bad debts at a discount, and the bottom feeders when the debt is close to aging out are awful.

Is it necessary to call someone with debt a “deadbeat”? Often the people who are being hounded by debt collectors are victims of predatory lending and a system designed to punish them with fees for being poor.

The name/title doesn't always apply, true. But sometimes it really does.

Most blanket statements have flaws in them...

At least in America, you can demand that all correspondence goes through certified mail, with big fines if they don't.

Not precisely "certified mail," but just "mail." They can choose to use certified mail if they want, but it's not required. You should always use certified mail to communicate with a debt collector, no matter if the debt is legitimate or not.

I have done that twice for family members, along with asking for proof of the debt, and that they are authorized to collect it. Both times, never, ever heard from the collector again.

My understanding with debt collectors, is that they usually purchase a spreadsheet with very limited data, and there is almost never a paper trail for said debt. Which also means debt has a habit of showing up on multiple spreadsheets that keep getting resold. I think planet money did a podcast on this topic.

Patio11 also wrote about talking to debt collectors with regards to identity theft. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...

This seems to the the correct understanding. See these two articles that give the view from people who tracked down the debt collections and the bad data in those spreadsheets.

Bloomberg: https://www.bloomberg.com/news/features/2017-12-06/millions-...

NYT: https://www.nytimes.com/interactive/2014/08/15/magazine/bad-...

Why would a person who legitimately owes a debt win just by showing up?

I had a small unsecured debt that was put into collections and then I was served an order of execution by the marshal to appear in court. I went to court and the judge made me sit down with the debt collectors lawyer and a mediator and we worked out a repayment plan at about 60% of the original balance.

I really don't understand what "win" means in this context besides avoiding a default judgment.

> Why would a person who legitimately owes a debt win just by showing up?

Debt collectors often don’t play by the rules, or don’t keep good records that are required to legally collect the debt. Even if they do, it’s not like the lawyers are likely to spend time tracking down the info for a single case to prove it.

“Win” means the debt is found invalid due to one of these reasons.

As I mentioned I have been to court for a debt collection.

Before you go to court the debt collector has to send you proof they served you papers for your debt. They have to send you proof of the chain of debt from the original creditor on down. For a $3,000 debt I was sent a packet of at least 80 pages with tabbed chapters and detailed photos confirming service before I had to go to court. I did not request this information, they were required by law to send it to me.

These are not optional. These records are necessary to get a judgement.

Debtors ARE at a disadvantage in the courts if they do not have the money for a lawyer to fight or they don't have the time to show up on their own. This is an injustice. But saying that debt collection is being illegally enforced in the courts I believe is just untrue. If you do not owe a debt and contest it in court you prevail. But if you do owe a debt and through neglect or ignorance you end up with a default judgment or negative consequences that is on you.

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 one.

I think it's a mistake to look at these things too moralistically though. At an individual case level, maybe you're right. It is on you.

What we're looking at here though is an industry. It is built on knowledge about how certain people behave under stress of debt and exploits it. It's also dirty all the way down. Mostly, by the time these go to court the debt has been resold multiple times at small fractions of face value. Crazy interest has been applied.

Economically, it is really going for the last drop. Companies selling off bad debt... it's a pretty marginal income. On the other side, these collection agency debts basically eject a decent portion of the population from good standing in society. It's harmful, and it is happening in a court.

Scale, circumstance... when it gets this big we need to look at it systemically.

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 in both states one must "prove-up" a default before judgment is entered by presenting a "prima facie" case. In other words, you must prove your case before a judgment is entered, even if the defendant does not show up.

So in some circumstances even if you don't show up the debt collector must fight to get a judgment as if you were there. I really suggest you look into the resources available to low income debtors in most states. In my state there are entire systems set up to support people who feel beset by debt collections.

> You took on the debt. You decided not to show up in court. Are debtors just never accountable for their actions?

And what happens when that debt is $117 from Comcast because you "didn't return their cable modem" and they lost a class-action lawsuit about this?

Did I document that I returned their cable modem 4 years earlier because I used my own? Probably. Did I bother keeping that record for 4 years after it didn't appear on any of my bills? No.

So, when I moved and I didn't have a cable modem to return and they charged me for it and then turned it over to debt collectors (and magically never notified me before it went to debt), I wound up with a stupid-ass $117 judgement that I'm going to have to hire a lawyer for, force Comcast to disgorge 4 years of records, and put it on a docket.

And then Comcast will finally not show up and I'll win. After spending WAY more that $117 of resource and time.

Or I can ignore it for 3 years and file to drop it with the credit agencies and then they'll get rid of it.

People default all the time because they don't really appreciate what can happen if they ignore a court summons.

And, often people mistakenly rely on the advice of friends or family who suggest the debtor wasn't served properly, the debt is too old, they spelled your middle name wrong, or whatever.

There are tons of legal myths out there, such as, non-competes can't be enforced, it takes months to evict someone, I can pay my rent after the three-day pay or vacate date passes, or the like.

Also, in my experience people unfamiliar with law seem to be susceptible to spinning a story in their head that they think will exonerate them only to find out too late that their imagination doesn't carry much weight in court.

> There are tons of legal myths out there, such as, non-competes can't be enforced

At the risk of going off-topic: would you happen to have more reading on this?

Non-compete law is dependant on the state (it various a lot). In many states non-competes are very enforceable.

Search for non-compete enforcement in the states you are interested in. You should find plenty of articles put out by law firms.

Oh, that's all you meant. I thought it was always mentioned under the context of it being unenforceable in a particular state, so that's what I was confused. Didn't even realize there are people who thought they're unenforceable everywhere!

You would be surprised. I think people confuse rarely enforced with unenforceable.

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.

I contend that the debt, after being sold, is not “real” any longer, and therefore the debtor has no moral obligation to repay it. Legal? Definitely.

The original lender has written the debt off, probably gotten a tax break from the government, and moved on.

People and companies break contracts all the time. Moralizing over it is just a distraction from the economic and juridical forces at play.

To be fair, it's completely legitimate to issue debt that the original lender can sell for liquidity, although it should probably be difficult or impossible for institutional lenders (eg credit card or mortgage) to originate those. The real problem is the combination of interest and inablity to default onto some concrete piece of collateral, which in the creditor-preferred case of making incremental payments without net reduction in the principle, amounts to fractional ownership (like owning stock in a corporation) of a person, ie slavery.

You can break your contract too by declaring bankruptcy and screwing over the debtors.

Your debt might not be real or moral but you still legally have to pay it so what does that change.

Why would selling debt make you morally not responsible for it? My mortgage has been sold multiple times. IMO, I still 100% have a moral (and obviously legal) obligation to pay it.

Unlike secured loans like mortgages, the cost of default for unsecured loans is already priced in to the interest rate of the debt. Once it gets sold a third party, that's just a bet by that company that they can strong arm you into paying them something above what they paid for it by exploiting your anxiety or misplaced sense of duty. They didn't earn anything -- they didn't create a service or good that you found valuable, didn't invent something that saves you time, didn't make you life easier or more comfortable. They are scavengers. There is no moral obligation to enrich scavengers.

> Unlike secured loans like mortgages, the cost of default for unsecured loans is already priced in to the interest rate of the debt.

That cost likely also takes into account the money they can get for selling the debt of defaulters. Otherwise the bank down the street that does this more accurate calculation would be able to undercut them by offering a lower rate and take all their business. There's no free lunches.

The existence of a secondary market for debt affects the price of primary issuance of debt (in a way that benefits borrowers).

Your argument could be applied equally to say that anyone who buys a share of stock in the open market (not during an IPO or secondary offering) hasn't actually made an investment in the company because the company didn't get those exact dollars.

With identity theft these days, while I’d agree that it’s certainly _less_, I’d contend that it’s not an insignificant number either.

When a company sells a debt at discount, can they write off the rest of the loss?

Rules vary from state to state, and even court to court. It sounds like your experience happened in a jurisdiction with rules that are unusually protective of debtors' rights. Maybe this was New York City?

The vast majority of jurisdictions do not require creditors to provide this information in most cases.

NYC's rules came into place within the last decade, after patterns of serious abuses by creditors.

Or is this because those who don't show up know they have no defense? While I agree there is a problem you're not proving it here.

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 <5% of face value, and comes with virtually no information or documentation.

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 do this as their business. They work repetitively, create a process and pursue cases as long as average revenue exceeds average court costs. If a defendant shows up and wins, it's a small cost. Most defendants don't show up, so they don't bother spending legal time making cases good.

And yes, it is the courts responsibility to put a stop to it. For one thing, resolving debt humanely (or not) has been a court function since ancient times and still is. Secondly, debt collectors have basically turned these courts into their own shady place of business. It reflects badly on the court, besides clogging it.

>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 debt.

I am against exploitative debt fees/interest and I realize the debt collection world is full of shady figures but the narrative of the debtor as victim is a bit oversold.

No it isn't. Many people become debtors because they have no choice.

If the choice is between clocking up an insane credit card bill at astronomical rates or not having your family thrown out onto the street for another month or two because maybe your job search will finally pay off, what would most people pick?

Some people get into debt because they can't manage money. A lot of people get into debt either because they're not paid enough, or they're not paid regularly enough. or the economy fell apart around them for reasons that are nothing to do with them.

And anyone who freelances will tell you stories of clients who refuse to pay for 3-6-9-12 months past due. (Yes, you can always find better clients - if you have enough of a lead time.)

Debtors are debtors because they're at the bottom of the power pile. Many aren't "guilty" of anything except getting screwed over by a business culture which is driven entirely by inhumane feral greed.

You're moving the goal posts on me. I'm talking about debt collection enforcement not the morality or circumstances of why people take on debt.

You're the one who put the goalposts on:

> the rest of the people have a [legitimate] original debt right?

> the narrative of the debtor as victim is a bit oversold.

When in fact the narrative of the debtor as victim is significantly undersold, and many (I suspect, but won't assert, most) original debts were incurred due to usurious and predatory lending.

I wouldn't argue that debt collection enforcement is outright unethical in general, but their cases tend to very flimsy, and if people realize they can easily knock them down... good for them.

Don't sign the contract and take on the debt if you can't pay it.

If the contracts are usurious and predatory then they probably will not stand up in court if challenged. Most collection agencies settle for 50-70% of the balance of a debt without question anyway.

Debt collectors have to provide proof that you know about your debts and that they are legitimate in order to enforce collection of them. If they can't do that then there is no judgment.

> If the contracts are usurious and predatory then they probably will not stand up in court if challenged.

That's exactly what netcan was saying upthread.

> You're moving the goal posts on me. I'm talking about debt collection enforcement not the morality or circumstances of why people take on debt.

Not all people chose to take on debt. From the linked article:

> Medical debt can be particularly devastating and accounts for more than half of all collections activity.

I don't think we can realistically characterize medical debt as a choice for most individuals. If someone is ill and and has medical debt, is it right to issue a default judgement against them for that debt? What if their illness is the reason why they couldn't show up to court in the first place?

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.

AFAIK harassment in most states is very illegal now and is a great way to get your debt dismissed.

The same goes for fraud in debt collection. As I mentioned in previous comments, tactics like sewer service by debt collectors are a great way to get your debt dismissed.

Many people with lapsed unsecured debt know they owe that money, they simply prefer to pretend the debt will go away if they ignore it. If they don't know they owe the money then they definitely know they're being sued because in court they can't get a judgment against you without you knowing about it. On top of that many states require the debt collector to prove you owe the money even if you completely neglect engage with the system at all.

Harassment and fraud is illegal, but people do illegal things all the time.

"court they can't get a judgment against you without you knowing about it"

... in theory, but in practice there are several ways to "serve notice" that don't involve the other party actually receiving the notice. Sure, if you can hire an attorney you may be able to get the default judgement overturned if you find out about it later, but again, it isn't all roses.

I'm not an expert on every states laws, but I don't think that the standard of proof for an uncontested claim isn't particularly high in most jurisdictions.

And to add to this, if a debtor doesn't get served (let's say that they took some bad advice from a friend and decided to dodge the constable trying to serve them in the hopes that "since I wasn't served, I can't be sued" is accurate), the constable will notify the attorney that contracted them to serve papers, saying that they couldn't serve them in person. At that point, the attorney sends a certified summons to the debtor's last known address and is then allowed to go to the court clerk and say that they've tried their best x number of times but the debtor can't be reached. They will enter their certified proof of mail into the record and the case will be tried on the scheduled date regardless, resulting in a default judgment when the debtor doesn't show up. Once that happens, if the debtor is employed (and even depending on the type of debt), they'll get a nasty surprise when their employer notifies them that their wages are being garnished and that there's no longer anything they can do.

I mean, I've been harassed by years for a debt that doesn't even belong to me, but rather to the person who previously had my phone number. Over the years I have learned their name, address, name of one of their family members, amount of the debt, and who the debt was originally owed to (a local government agency no less). The debt collectors shouldn't have disclosed any of this to me but they did, unprompted, often in voice mail. Mailed threats have been unsuccessful in stopping the calls, as when I send a nastygram to one collector they seem to just sell the debt on to another.

I guess my point is that the legal protections against harassment do exist but are not effective. It's not even my debt and I have a master's degree and generous income and I ended up changing my phone number in order to stop multiple calls per day. So to whoever ends up getting that number assigned, sorry about Esteban's $8k in back tuition and good luck.

The irony is that my new phone number also gets calls from debt collectors, but far less often. It seems the debt was either smaller or sold into a less predatory corner of the industry.

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

Yeah ok. I think you will keep scapegoating these other ‘evil’ ‘no-defence‘ people, until you yourself are on the receiving end of systemic inequity - or systemic failure - at some point and that’s when the penny will drop...

It's pretty fundamental in our society that the court looks at the arguments presented before it. If the claimants make a reasonable case and you have nothing to say about it as the defendant then the court will act on that. The idea is that it stops people coming into the court prejudiced.

This isn't a case where a guy didn't pay his builder and then no-shows at court.

These are debts sold at >10% of face, often smallish debts that have accrued massive interest. Some agencies specialise in persistent calling. Some specialise in deal-making. Some specialise in legal proceedings. These are the ones we are talking about.

To work, they need to keep legal costs low. They often don't bother to have a case, because they're happy to win just the no shows. That's the formula. Buy 100 notes. Take them to court. 80 or so will no show. You can then try to seize the their assets. The whole thing is premised on the fact that these defendants don't open their mail. Either side making a case to a judge is rare.

It's a misuse of the legal system, and the court shouldn't allow it.

Most states now have laws against debt collection harassment and have caps on debt collection interest and fees.

There has to be proof in court that a debtor was served papers to get a judgment. There's a term called 'sewer service' where some shady collectors try to fake this service. If you get lucky your debt collector might try this on you, it's a great way to get debt wiped clean by a very angry judge.

unless the debtor has the cash ready to pay, most debtors never, ever respond (and shouldn't) to any actions to collect debt by a third-party collector, so that there is no chance at the even tiniest appearance of acknowledgement.

often, even if you have the intent to pay the debt, paying to any agency other than the originator of the debt is risky. debt collectors roll over debt en masse to keep them legally fresh and will not honor any promises that haven't been duly signed and served.

Contact from a third party collector? Sure, don't respond. But if you're being summoned by the court under threat of a default judgment then you should probably show up or don't be surprised about the outcome.

for sure, respond to the court.

you can often find low-cost, non-profit defense organizations to help if needed.

> To work, they need to keep legal costs low.

But they will absolutely try to claim 4-6 hours of legal work at $275/hr, for mail merging a Word document to send you.

> It's a misuse of the legal system, and the court shouldn't allow it.

I really don't see how.

They file a case. They present an argument. The other side doesn't. What should the court do? Keep asking the other side to bother to show up? If they did that you could block any claim forever by just not showing up. That's not justice.

Our whole society's legal basis is 'show up and present your case and have it judged'. It's called the 'adversarial system' - look it up.

If it's a genuine debt, and it sounds like it is, then either pay up or argue your case in court.

I'm not thinking about this as an individual case, or debating an individual case.

I'm talking about a business model whereby an agency systematically buys "no show debt" at a tiny fraction of face and mass produces personal bankruptcy. As the article shows. This business model (subsidised by the state, which provides the court), in 2020, is civil law.

That business model is not something the courts should play ball with. Lawyers and judges will stay within the legal rules.

In any case, I think there needs to be a debt regulator...

You can't address the business model if you can't explain how you would change how an individual case plays out.

The standard of evidence in civil court is "the preponderance of the evidence". Would you propose changing that standard, so that a debt collector's unchallenged word isn't good enough to prove their case? What exactly do you propose to do about the fact that most people default?

Should we make participation in civil cases mandatory and issue bench warrant when defendants fail to appear? Should we reduce how much income can be garnished so that garnishment is effectively useless? Should we require that every update in the case be personally served by a process server?

The business model would collapse overnight if debtors began challenging creditor plaintiffs en masse. I don't see how the failure of a defendant who has been properly served to defend their case reflects a systematic failure on the part of the courts or the law.