As consumer debt soars across the United States and more people fall behind on payments, debt collection cases are crowding the courts. Individuals in the lowest income bracket are three times more likely to face debt collection actions compared to those in the highest income bracket.
But much of this debt is unfair: amounts are inflated, never owed, already repaid, or unfairly pursued. However, presumed debtors are almost never represented by a lawyer in court.
Northwest Justice Project (NJP) is working to change that. NJP attorneys across Washington State assist hundreds of people every year who are fighting unjust debt.
Here, we interview Scott Kinkley, staff attorney in NJP’s Spokane office. His specialty area of practice is consumer protection, and especially all things having to do with debt and debt collectors. Scott has pioneered NJP’s work in defense of low-income clients dealing with unjust debt for the past 11 years.
Interview with NJP Attorney Scott Kinkley, Debt Warrior
Q: Why is debt such a huge problem?
Very few people have money set aside for covering expenses like emergency dental procedures. Instead, individuals take out credit, leading to the need to navigate payments.
The backend of this system is the debt collection industry. When a person encounters a debt collector, it’s because they are either unable to pay, or they don’t owe the debt.
I have represented people in over 300 debt collection lawsuits and I can’t think of a single person who had the ability to pay it but just didn’t want to. A significant portion of defaulted credit stems from domestic violence cases, where financial control by a partner leads to credit issues.
Q: How does the debt industry work?
Many collection agencies are organized around digital data processing and use of an unskilled labor force of debt collectors who often apply psychological pressure to get people to voluntarily pay. And if that fails, a collection agency and especially a debt buyer would then proceed to litigation.
A collection agency bringing a lawsuit is required to inform individuals of a debt in collection by serving them with a copy of the summons and complaint. This gives people notice and the opportunity to defend themselves in court. Some collection agencies have developed tricky methods to avoid giving people this opportunity.
For instance, high-volume collectors hire process servers to serve notice of the debt and upcoming court action. The collection agency may pay process servers a fixed fee for only one service attempt. That process server knows they will lose money if they have to go twice to the serve the papers. So, process servers go to the address provided by the collector, hand off the papers to whoever happens to be there, and then sign an affidavit that says they’ve served the debtor.
However, it often turns out to have been to the wrong person or the wrong address and the debtor has no notice or opportunity to defend themselves. Then, when the person doesn’t show up at court, they lose by default. The debtor then has a legal judgement against them for a claim they may not owe, and if they owe it, it may be some unfair amount.
Q: What happens when a presumed debtor goes to court?
Sometimes the courts have very large, overwhelming dockets of debt cases, and the courts need to move these cases through. Oftentimes that creates an abbreviated procedure, as courts struggle to manage the load.
Another major difficulty, is that court may ask the debtor questions like, “Well, don’t you owe this money?” That’s unfair because sometimes people do owe some amount to someone at some time but have defenses or the amount may be inflated–perhaps interest was wrongfully charged, there were inappropriate fees applied, or payments made are not showing up.
This question is also unfair since the burden of proof should always be on the plaintiff, and when courts ask a debtor this question, they are essentially reversing this burden of proof, assuming the allegations against the debtor are true, and then asking the debtor to disprove them.
That is not how our system of justice is supposed to work. It is the debt collector who is required to show proof that the debt is owed. Without being represented by a lawyer in court, consumers typically do not understand how to demand that proof.
Q: How many cases are we talking about and how often do presumed debtors have a lawyer?
Sometimes a firm will file six thousand plus lawsuits per year, and they have very poor internal safeguards against sweeping these accounts into their automated system that treats all accounts the same. Much of what is submitted to the court is boilerplate forms, with individual cases almost never closely examined.
Lack of representation is also a big issue. The most recent report from the Center for Responsible Lending found that presumed debtors almost never have legal representation. Of more than 21,000 collection cases filed over four years by one law firm that represents debt buyers, only 1.2% of defendants were represented by an attorney.
Q: How do you defend people facing unfair debt charges?
These cases are defendable. For the collector, the case is a name. It’s a number. It’s not a human on the other side. But for every one of NJP’s clients, there is a human on the other side. There’s a reason why they’re in the circumstances that they are in. That’s the story that needs to be told to the court within some legal framework that operates as a defense.
By shedding light on previously shadowed debt collection court dockets, NJP has brought attention to cases of bad service, fraudulent debt, and cases where debts were wrongly claimed. But the high volume of default judgments remains a major problem for our clients and the courts. The sheer mass of cases can allow bad practices and deficiencies to remain hidden.
Attorneys are bound by ethical rules around our caseloads. This is not only so that we’re representing our clients diligently, but also so that we’re not bringing bad lawsuits on massive scale, as can happen when debt collection attorneys sign large stacks of complaints per day without reviewing the information of those case. That review is supposed to be the first procedural safeguard to prevent bad litigation from coming to the courts.
Q: Why did you get involved in this work?
My dad was an attorney, and this was the area of practice that he settled into late in his career. He got started with it after getting into a dispute with a utility company over several hundred dollars and they sued him for it. He was pretty displeased. He was even more displeased when they served me—an eight year old kid—with a summons and complaint. And, being eight years old, I threw it away.
He was so upset that he taught himself the rules and regulations around debt collection law and got involved with some national organizations that help debtors. I learned under him from a very young age how to do this work.