Automated Debt-Collection Lawsuits Engulf Courts
nytimes.com
nytimes.com
Previously, the reason for not collecting debt was due to the higher cost of legal action, resulting in people using a variety of methods from simple reminders and payment plan offers, to intimidiation and threats.
Now that legal action is cheaper, courts will be requiring much more is done to ensure accuracy and fair representation. This will still be fairly cheap (things like ensuring the bank's data dump includes all the relevant documents, and verifying the records that make up the chain of custody for the debt, which are all just electrontic transactions), resulting in the ladder becoming firstly reminders and secondly a fair and accurate hearing in court, with hopefully no resorting to threats and intimidation.
Cheap and effective justice is something to be praised, and in this case will eventually reduce the cost of credit too - and increasing better informed consumers of credit mean a competitive marketplace, passing the savings on to where they will boost the economy overall.
Perhaps in a very long term after there is an outcry against bogus and erroneus debt lawsuits.
> Previously, the reason for not collecting debt was due to the higher cost of legal action, resulting in people using a variety of methods from simple reminders and payment plan offers, to intimidiation and threats.
Now in addition to reminders, payment plan offers and bogus threats, they can also use the state to intimidate and jail debtors. Might as well just start a debtor jail like in Saudi Arabia.
> Now that legal action is cheaper, courts will be requiring much more is done to ensure accuracy and fair representation.
Somehow I see the opposite happening, at least in the short term. The cheaper it is the more errors will be commited. Any little debt collection agency can acquire, sell and re-sell these databases of debt-ors. In the process spreading and entering bogus data and errors. The justice seems to be cheaper for the debt collector who can fire off lawsuites from a database table, but I don't see this being cheaper the debt-ors. This is just the collection agencies getting the state to do their job for them.
> Cheap and effective justice is something to be praised, and in this case will eventually reduce the cost of credit too.
I agree as long as debt-ors also get to benefit from it not just the collectors. Collectors should not be able to file lawsuits in Alaska or Hawaii for debtors that live in Florida for example. Someone has to make sure the debtor received their summons so they know there is a court case they can go to and defend themselves.
To summarize, I think cheap justice will also mean a lower quality justice or justice that benefits only one party.
Justice that benefits only one party is of course no justice.
At least I think that is part of the strategy, as you can see in this article from Minnesota about people being arrested over unpaid debts, at taxpayer expense.
http://www.startribune.com/investigators/95692619.html?elr=K...
Quote from above article:
"Admittedly, it's a harsh sanction," said Steven Rosso, a partner in the Como Law Firm of St. Paul, which does collections work. "But sometimes, it's the only sanction we have."
Taxpayers foot the bill for arresting and jailing debtors. In many cases, Minnesota judges set bail at the amount owed."
Fuld - the guy that gambled Lehman's fortunes and ultimately had to fold his hand
Slamowitz - the guy who's automated lawsuits slammed the courts, clogging the system
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