I just finished reading a Pew Trusts post from 2020. The post was about civil litigation and the fact that debt collection lawsuits are now dominating court dockets. Among other things, it implied that the civil court system is skewed in favor of plaintiffs. There was also an implication that the creditors taking debtors to court is an abuse of the system. But is it?
Debt Collection Dominates Civil Court
For the record, those at Pew have done their homework. Their research clearly shows that debt collection cases have taken over civil courts. Even as other forms of civil litigation have dwindled over the last 30 years, debt collection cases have only increased in number. But knowing that fact alone is not enough. We need to know why creditors are taking debtors to court.
The Money Judgment
The decision rendered in a civil court case is known as a judgment. In a debt collection case, the judgment involves a monetary award that covers the original amount owed plus legal fees, court costs, penalties, and interest.
Without going to court, a creditor is still entitled to the original amount of the debt. Creditors are usually entitled to late fees as well. So, what’s the motivation for going to court? Are creditors trying to recover legal fees and interest? No.
Access to Legal Collection Tools
The biggest difference between trying to collect a standard debt and collecting an outstanding judgment is the tools creditors have at their disposal. Without a judgment in hand, a creditor can do little more than send collection letters and make a few calls here and there. Thanks to consumer protection laws, creditors are barred from being aggressive.
A creditor could work on collecting a standard debt for years and get no satisfaction. But then that creditor turns to civil court and wins a judgment. Now it’s a whole new ball game. Now the creditor can take a look at wage and bank account garnishment, property liens, asset seizure and sale, and other legal tools.
This is where the complaint that civil court is skewed toward plaintiffs comes in. According to Pew, defendants in debt collection cases rarely have legal representation. Perhaps it’s because they can’t afford it. Additionally, defendants typically fail to participate in the process. That leads to a very high rate of default judgments. Creditors can combine those judgments with legal collection tools to recover payment.
The Debt Is Still the Debt
Salt Lake City’s Judgment Collectors points out that the starting point for all of this is the original debt in question. They also explain that creditors bear the burden of proof in civil court. They must prove the legitimacy of the original debt in order to win a judgment and begin collection efforts.
When all is said and done, the debt is still the debt. The debtor still owes the money; they are still obligated to pay it one way or another. If they had paid when the debt was first incurred, there would have been no civil court case. There would be no judgment.
Being on the losing end of a debt collection case isn’t a walk in the park. It’s easy to see what judgment debtors go through and react by assuming that creditors taking them to court is an abuse of the system. But when you take away all of the legalese, everything still goes back to that original debt.
Plaintiffs may have a slight advantage in debt collection cases. On the other hand, they are at a serious disadvantage without a judgment.
