New Study on Debt Collection Lawsuits

If you owe substantial debts that have gone unpaid for several months, it is more than possible that the original creditor sold your debt to a third-party debt buyer that is now attempting to collect the money you owe. But even if your debt is still in the hands of the original creditor, you may be wondering if you need to worry about being sued over the bills you have not paid. Who gets sued most often by debt collectors? Do you need to owe a lot of money in order for a creditor or third-party debt buyer to take the time to file a lawsuit? Or are other factors involved when debt collectors make decisions about filing lawsuits to recoup debts? According to a recent article from ProPublica, the answers to these questions might be more complicated than you would think. Indeed, according to the article, race, socioeconomic status, and geographic area all may play a role in your risk of being the target of a debt collection lawsuit.
Courts Used More Frequently to Collect Consumer Debts
Over the last couple of years, ProPublica has been compiling information about debt collection and the increasing use of the court system to collect consumer debts. In other words, the nonprofit organization has been tracking the ways in which debt increasingly is collected through lawsuits. In addition, it has attempted to identify some of the trends among those collecting the debts and for the debtors who are sued. What are some key points to takeaway? According to the article, ProPublica has uncovered some of the following facts in recent years concerning debt collection:
  • In 2013, approximately four million debtors in America had their wages garnished, but their socioeconomic status appeared to impact the likelihood of wage garnishment. “Workers earning between $15,000 and $40,000 a year were the most likely to experience a garnishment.”
  • Race also appears to play a role in debt collection lawsuits. According to the article, “black communicates are hit much harder by debt collection lawsuits than white ones, even in places where black households and white households have similar incomes.”
  • Active-duty soldiers tend to be targeted by debt collectors, particularly when they were unable to make timely payments on subprime mortgages.
  • Hospitals, both public and nonprofit, are among the most fastidious debt collectors who rely upon the court system. In other words, hospital facilities often file lawsuits against patients who have not made timely payments on their bills, “even when those patients obviously qualify for financial assistance.”
  • Some banks and credit card companies file claims more frequently than others. Capital One files more lawsuits against debtors than other banks investigated. In addition, the article cites Capital One as being among the banks that filed the most lawsuits against consumers during the years of the recession.
What do these facts tell us? In short, we may be able to track debt collection lawsuits based on external factors such as race and socioeconomic status. We also might be able to determine, based on the bank involved, whether a debt collection lawsuit is more likely than not.
Contact an Oak Park Consumer Protection Lawyer
For many debtors in the greater Chicago area, filing for personal bankruptcy may be one way to help manage the substantial debts you owe. If you have questions about your options for managing your debt, an experienced Oak Park bankruptcy lawyer can speak with you today. Contact the Emerson Law Firm for more information.
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