industrialized debt litigation
Consumer debt is an overwhelming problem facing many Americans. Credit card and medical debts currently
account for over $1 trillion of Americans’ total of $16 trillion of household debt - and at least $88
billion of medical debt is currently in collections proceedings. These consumer debts weigh
disproportionately heavily on low-income households and communities of color.
When creditors are unable to collect, they often sell the asset to private, third-party debt aggregators
for pennies on the dollar, taking the write-off and washing their hands of the matter. A small handful of
companies snatch up the majority of these debts, to feed an assembly line legal filing process built to
enlist the courts. These aggregators are behemoths, using massive nationwide scale to turn low-dollar
debts into immense profits.
When debt aggregators push these cases into the court system, they (quite literally) bank on
under-resourced, untrained, and intimidated defendants taking no action. Unsurprisingly, around 70% of
defendants fail to respond in any way to these lawsuits, leading to default judgments - absolving debt
collection plaintiffs from having to prove their case.
The sheer volume of debt lawsuits, coupled with the high default judgment rate (and the accompanying
interest, attorneys’ fees, and filing fees a default judgment entitles them to recoup), add up to a highly
profitable enterprise - and predictably, debt collection lawsuits have risen to account for 24% of state
As an indication of the predatory nature of these debt aggregators, and the economics of their abuse of
the court systems, almost 70% of the cases in which the defendant submits a response, are
simply dropped by the debt aggregators and their teams of attorneys. They are uninterested in waste their
fighting someone who is willing to defend themselves, and will instead focus their atention on other
they hope to abuse and bully, unopposed, through the courts.