Debt Collection Companies Have Hijacked the Justice System

Denise Zencka, a mother of three in Indiana, had to file for bankruptcy because she couldn’t afford to repay her bills for treatment for thyroid cancer. And because she was unable to work, she had to stay with her parents in Florida while she recovered. She didn’t know that during that time, at the request of a debt collector seeking to collect outstanding medical bills, a small claims court judge had issued three warrants for her arrest. When she returned to Indiana, she was arrested by local sheriff’s deputies for the private debt she owed. Once at the jail, and being too sick to climb the stairs to the women’s section, she was held in a men’s mental health unit. Its glass walls allowed the male prisoners to watch everything she did, including using the toilet.

As in Zencka’s case, and in thousands of other similar cases around the country, courts are issuing arrest warrants and serving as taxpayer-funded tools of the multi-billion-dollar debt collection industry.

Debtors’ prisons were abolished by Congress in 1833. They are often thought to be a relic of the Dickensian past. In reality, private debt collectors are using the courts to get debtors arrested and to terrorize them into paying, even when a debt is in dispute or when the debtor has no ability to pay.

Tens of thousands of arrest warrants are issued annually for people who fail to appear in court to deal with unpaid civil debt judgments. In investigating this issue for the new ACLU report, “A Pound of Flesh,” we examined more than 1,000 cases in 26 states, in which civil court judges issued arrest warrants for debtors. The debtors were often unaware that they had been sued. In many cases, they had not received notice to show up in court.

Read the Report

Arrest warrants were issued in cases involving every kind of consumer debt or loan, including debts as small as $28. People have been arrested for debts arising from medical fees, federal and private student loans, car payments, unpaid rent, daycare fees, small-business loans, credit card bills, foreclosure deficiencies, high-interest payday loans, and gym fees, to name just a few types.

The process starts when a debt collector files a lawsuit, and it snowballs from there. Each year, collectors flood small-claims and other state courts with millions of suits seeking repayment. Many courts churn through collection suits with almost no scrutiny. Over 95 percent of debt collection suits end in favor of the collector, usually because alleged debtors do not or cannot mount a defense.

Then, with a judgment in hand, creditors can ask courts to require the person to show up in court for “judgment debtor examinations,” at which they are required to answer questions about their finances and assets. If the debtor does not appear for the exam, debt collectors can ask the judge to issue a civil warrant for the debtor’s arrest.

Our investigation found that many people missed their court dates because of work, childcare responsibilities, lack of transportation, physical disability, illness, or because they didn’t receive notification of the court date. We found two cases in which elderly women missed hearings because they were terminally ill. They died shortly after warrants were issued for their arrest. The threat of arrest is an incredibly powerful tactic for collectors. As one lawyer in Texas, who has sought arrests of student loan borrowers, has noted, “It’s easier to settle when the debtor is under arrest.”

Once arrested, a debtor may languish in jail for days until he can arrange to pay bail. Judges sometimes set bail at the exact amount of the judgment. And the bail money often is turned over to the debt collector or creditor as payment against the judgment.

Even when people aren’t arrested, warrants can cause long-lasting harm because they may be entered into background check databases, with serious consequences for future employment, housing applications, education opportunities, and access to security clearances.

Predatory debt collection companies are profiting from Americans who are trapped in debt and on the financial edge as a result of the loss of a job, illness, the death of a family member, or a divorce. The impact of abusive collection practices is particularly harmful to Black and Latino communities, which face longstanding racial and ethnic gaps in poverty and wealth.

There is scant protection from collection abuses under federal and state laws. And even when there are laws in place, abuses remain largely unchecked because regulators rarely intervene to stop them. Unless that changes, the most vulnerable debtors will continue to be victimized by predatory collectors and courts that serve them.

For more on this issue, click here.

Do you have a warrant issued or threatened in a private debt collection case? If so please contact us at PrivateDebtReport@aclu.org.

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Anonymous

This story makes little sense, if she filed for bankrupcy, there's no way would a judge issue warrant for arrest for any of those debts listed in herb paperwork, every debt gets listed.

Anonymous

No one should ever go to jail or be arrested for debt. Period. Most of these people are not 'won't pays' but 'can't pays'. And the fact that these bloodsuckers are using our court systems (our tax dollars!) as a bludgeon for PRIVATE PROFITS is disgusting. If there is a hell, the people that own these companies and set the policies, have a private extra-hot room dedicated just to them.

IronyIsDead

Watch "Dirty Money", episode 2 on Netflix. There was at least one case where a payday lender went to prison.

Anonymous

You already said the word agencies, it comes down to contract clauses that most people are not aware of of contracts implicates mutual liberty

Tony

They can this whole story is blown out of proportion. They are pathetic specimens of humanity

Anonymous

The "Judicial Branch" of government is completely broken in their constitutional role of providing Judicial Review over their co-equal political branches. Fix the Judicial Branch it will minimize these types of abuses.

The two political branches: the "Legislative Branch" (Congress, state legislatures, town councils) and the "Executive Branch" President, Governor, Mayor) are primarily designed to represent POPULAR issues and people - issues that win elections. The two political branches aren't really designed for UNPOPULAR issues or people.

The "Judicial Branch" or courts, commanded by the U.S. Supreme Court, is the branch of government most dutibound to represent and protect UNPOPULAR issues and people.

The big question is why the "Judicial Branch" isn't protecting these defenseless people from the powerful? Maybe we need Campaign Finance Reforms in our court system so judges and justices are truly an Independent Judiciary.

Anonymous

Don’t ignore a summons if you received one go to the court date file a production for proof of ownership and right to collect. 9/10 times they won’t have the legally required documentation to even be able to legally sue you in court.

Anonymous

Only if u know you're being sued. In some cases, ppl are unaware that a suit has been filed. One of the best ways to actually stop this type of abuse, is to get rid of third party collection agencies altogether. I suggest writing and lobbying Congress without ceasing, to outlaw third party debt collection.

Mikal Stanley

With nearly 30 years in the collections industry, I hAve never had to resort to a KFC but I have commenced on wage Garnishment and bank attachments only when forced to take such action. I find your reply somewhat asinine since if a "CONSIMER" ( I haven't used the word DEBTOR in over 15 years) is sent a summons to appear for a JDX, I'm sure the agency has prepared to provide the courts supporting documentation such as interrogatories, communication and history of past attempts to resolve voluntarily prior to having to resort to civil procedure, etc. Etc. On the other hand, agency's need to stop wasting their time and efforts on some such frivolous collections and uncollectable accounts. Trim the fat from the agency portfolio and get to the meat and bones of those who have the means and no valid excuse for not paying.

Mikal Stanley

With nearly 30 years in the collections industry, I hAve never had to resort to a Judgement Debtor Exam but I have commenced on wage Garnishment and bank attachments only when forced to take such action. I could write a book.on this exact article. If a "CONSIMER" ( I haven't used the word DEBTOR in over 15 years) is sent a summons to appear for a JDX, I'm sure the agency has prepared to provide the courts supporting documentation such as interrogatories, communication and history of past attempts to resolve voluntarily prior to having to resort to civil procedure, etc. Etc. On the other hand, agency's need to stop wasting their time and efforts on some such frivolous collections and uncollectable accounts. Trim the fat from the agency portfolio and get to the meat and bones of those who have the means tp pay and no valid excuse for not paying. Most of the previous replies are all about consumer right but a service was rendered and I defend the creditors rights when and only when it is warranted and with merit. The reason I have been so successful in the collection industry is due to the fact that there is 2 sides to every story and I use common sense and I know within minutes of speAking with a consumer if I can collect on the debt or not.

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