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1.5.4 Collection Litigation Clogs State Courts

Debt buyers aggressively use state courts to collect on their purchased debt. A 2013 study found that 195,000 collection lawsuits were filed in New York in one year, mostly by debt buyers.37 (Filings in New York have been significantly lower in recent years, in large part because of unique reforms the state has instituted with regard to debt buyer collection lawsuits.) An analysis of over 150,000 collection actions filed in one year in Cook County, Illinois found that more than half were filed by debt buyers.38

Consumer debt cases are clogging up state courts. One 2013 study looked at the percentage of civil cases filed in city courts in New York state that were collection filings and found the following percentages: 76% in Buffalo, 77% in Albany, and 89% in Rochester.39 New York City Civil Court had the lowest at 36%, in large part due to new protections and requirements instituted in New York City.40 Other studies also find that over 50% of the dockets in some courts are collection cases.41

A single debt buyer, Encore Capital Group, has often filed between 245,000 and 470,000 new lawsuits against consumers in the span of one year.42 In 2012, Portfolio Recovery Associates filed over 160,000 debt collection lawsuits in state and local courts.43

Footnotes

  • 37 New Economy Project, The Debt Collection Racket in New York (June 2013).

  • 38 Brief of Amici Curiae Legal Assistance Found. of Metro. Chi., Nat’l Ass’n of Consumer Advocates, and Am. Ass’n of Retired Persons in Support of Defendant-Appellee, Portfolio Acquisitions, L.L.C. v. Feltman, 909 N.E.2d 876 (Ill. App. Ct. 2009).

  • 39 New Economy Project, The Debt Collection Racket in New York (June 2013).

  • 40 Id.

  • 41 Richard M. Hynes, Broke But Not Bankrupt: Consumer Debt Collection in State Courts, 60 Fla. L. Rev. 1 (Jan. 2008); Urban Justice, Debt Weight, The Consumer Credit Crisis in New York City and Its Impact on the Working Poor (Oct. 2007).

  • 42 See Human Rights Watch, Rubber Stamp Justice (Jan. 20, 2016), available at www.hrw.org.

  • 43 Consent Order, In re Portfolio Recovery Assocs., L.L.C., No. 2015-CFPB-0023 (Sept. 9, 2015), available at www.consumerfinance.gov.