Debt collectors frequently file lawsuits based on little more than a “computer tape” containing some very basic information about the alleged debtor and debt. A computer program files the suit. This means that if you are being sued, there's a good chance you will win if you defend yourself. This article shows you some of the debt collectors' weaknesses.
As anyone who visits our site or reads any of our writings can attest, we often point out that debt collectors frequently file lawsuits based on little more than a digital file containing some very basic information about the alleged debtor and debt. The New York Times recently confirmed that essential insight in their article, “Automated Debt Collection.”
In the article, the Times points to a firm named Cohen & Slamowitz, a Woodbury, N.Y., firm that specializes in debt collection. The firm has been filing roughly 80,000 lawsuits a year.
With just 14 lawyers on staff, that works out to more than 5,700 cases per lawyer. That in turn works out to filing about two cases per hour, every hour of a 365 day year. Of course, this leaves the lawyers no time at all to do anything else on the suit.
How is it possible? Cohen & Slamowitz relies on computer software to help prepare its cases, and the lawyers merely process the paperwork. As the Times article points out, typically, a debt buyer sends a law firm an electronic database that contains various data about consumers, including name, home address, the outstanding balance, the date of default and whether interest is still accruing on the account.
Once the data is obtained by a law firm, software like Collection-Master from a company called Commercial Legal Software can “take a file and run it through the entire legal system automatically,” including sending out collection letters, summonses and lawsuits, said Nicholas D. Arcaro, vice president for sales and marketing at the company. Although legal ethics requires a lawyer to perform an independent analysis to make reasonably certain a case is well-founded in law and fact, there is little time for such niceties when you’re filing two suits per hour every hour of the year.
The Federal Trade Commission has also weighed in, saying the system for resolving disputes over consumer debts was broken and in need of “significant reforms.” The agency urged states to adopt measures to make it more likely that consumers would show up in court to defend themselves; currently, most do not, resulting in default judgments. A court judgment gives debt buyers the ability to collect on the debt through actions like wage or property garnishment.
“We are pushing very hard to make certain that debt collectors have sufficient substantiation, particularly when a consumer challenges the debt,” said David Vladeck, director of the commission’s Bureau of Consumer Protection. Of course, this documentation does not exist in many cases.
This website provides people being sued for debt all the information they need to take action to protect themselves. If more people used it, they could probably force the debt collectors to change their business practices. Get the Debt Defense System and protect yourself.
Check out our Guide to Legal Research and Analysis for a guide to researching and laws and cases in the most effective way. But legal research is more about what you do with what you find, and so this is a primer on legal thinking and analysis as well.