university of Louisville
"Protecting Consumers in Debt Collection Litigation and Arbitration: A Roundtable Discussion" - August 5 and 6, 2009
I am interested in the use of litigation by the debt collection industry as a model not for purely academic reasons, but because I had been hauled into court for a debt I never owed. I am a victim of past identity theft, a military widow, and a student whose major is political science and whose minor is economics. My own hypothesis is that the markets as a general whole are severely distorted by a deadweight loss created by the debt collectors overuse of litigation and arbitration. I pulled over 600 cases in Kentucky courts over the space of 2 years, and found that the majority of the cases were filed by debt buyers, and many of the cases (over 10 percent) were so inaccurate that the underlying affidavits could be found to be derived from deliberately falsified information--thus resulting in wrong amounts being extracted, and wrong debtors dunned. Moreover, a policy and practice of formulaic allegations coupled with a deliberate interference with a service of process resulted in at least one case of a debtor not getting her day in court as expected. Such interference with process (e.g. misuse of special bailiff) in Kentucky hampers identity theft victims who already are hamstrung by lack of records or knowledge. Litigation is a constitutional right and is not to be abused by misusing litigation devices against debtors.