Millions of Americans struggle with old debts they can’t pay back, and live with the uncertainty of knowing that at any moment, they could have their bank accounts or wages seized by collectors. ProPublica has spent years gathering data on how often debt collectors use the courts to secure judgments against debtors – a tactic that affects millions of Americans. They sought to find out who is filing lawsuits, how many lawsuits are being filed, and who is being sued.
Here’s what they found out:
- In 2013, four million Americans has their wages garnished over consumer debts
- Workers earning between $15,000 and $40,000 a year were most likely to have their wages garnished
- Black communities are typically hit much harder by debt collection lawsuits than white communities, even with similar incomes
- Some public and nonprofit hospitals have been known to collect from patients who can’t pay their medical bills – even when they qualify for financial aid
- Capital One sues its customers more than any other bank, including during the last major recession
- One subprime lender seized wages from active-duty soldiers when they defaulted on overpriced loans
- Debt buyers are mostly responsible for the increase in lawsuits – in fact, in most courts, debt buyers filed more suits than any other type of plaintiff
- Defendants are largely not represented by attorneys in debt collection lawsuits
- Suits against residents of lower-income black neighborhoods were much more likely to result in judgments than lawsuits against residents of white, upper-income neighborhoods
- Where debtors live matters as least as much as what race they are
- Debt collectors who obtain a judgment often clean out debtors’ bank accounts – in cases where the account is worth less than what is owed, debt collectors can seize every penny
What can be done? Major companies who are flooding our nation’s already overburdened court system with lawsuits are not getting the scrutiny they deserve. The last federal law limiting garnishments was passed in 1968 and is now clearly out of date. As a step in the right direction, Missouri’s attorney general has suggested several commonsense reforms in December. If these reforms pass, the process would become fairer for debtors. The collection industry has supported these measures, and changes may be on the horizon.
Atlas Consumer Law has helped numerous debtors find relief in Chicago. If you are struggling with old debt or are facing a collections lawsuit, please contact our firm to schedule a free initial case evaluation. Our office can be reached at (312) 313-1613.