Debt Collection Lawsuits: How They’ve Changed and What It Means

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Debt collection lawsuits and the business of debt collection has changed drastically in the last few decades. In just 20 years, the number of debt collection lawsuits has more than doubled across the country going from fewer than 1.7 million in 1993 up to a whopping 4 million 20 years later. 

This number has only continued to increase as the years have gone on. While there has been a temporary drop in court filings due to COVID, we are expecting an explosion of new lawsuits as more and more people default on loans.

Peter Holland of the Holland Law Firm had a part in the research and findings published in the Pew Charitable Trust’s May 2020 report, “How Debt Collectors Are Transforming the Business of State Courts Lawsuit: Trends Highlight Need to Modernize Civil Legal Systems.”

This report examines the scope and the effects of this huge increase in debt collection cases on the financial and emotional wellbeing of consumers. 

Let’s look at a few of these findings here.

Debt Collection Lawsuits Are Changing

As we stated earlier, the number of debt collection lawsuits has been steadily increasing over the years. The majority of claims today are brought by businesses against individuals. Not only that, but the majority of all civil court cases are debt lawsuits brought by businesses against individuals. 

Even though many of these claims are filed in “small claims” court (in Maryland, “small claims” are for $5,000 or less) they can have a large and long-term impact on a consumer’s financial future, wellbeing, and mental health. 

In the Pew study, Peter stresses the impact of a small claims judgment:

“People don’t appreciate the impacts of a small claim judgment. If this is on your record, you’re not going to get a housing loan or a car loan, and it impacts other areas of your life. And all for a very small debt claim.”

The fact is that many individuals don’t have legal representation for small claims like the ones many businesses, debt buyers, and organizations bring against them. In fact, a great majority of these cases end in default judgments, resulting in more fees, increasing debt, and a system stacked against the consumer.debt collection lawsuit

Learn more about how debt collection lawsuits are changing how our court system works in the full Pew report here.

Many people feel that they should just give up when faced with debt collection harassment, debt buyer claims, medical debt, repossession lawsuits, private student loan lawsuits, suits for credit card debt and more.  Many people are not even aware that there are lawyers like those at the Holland Law Firm who concentrate on debt collection defense.

At the Holland Law Firm we know where the weaknesses are in the lawsuits filed by debt collectors.

We know from experience that proof of liability, damages, and even ownership of the debt is often lacking. We know that often these cases are winnable for the consumer.  

And we screen every case for violations by the debt collector of the Fair Debt Collection Practices Act, the Maryland Consumer Debt Collection Act, and the Maryland Consumer Protection Act.   

Sued on a debt?  Don’t give up. Give us a call. We’re here to help.

Contact us to set up a consultation appointment.