Report: Debt collector cases clog Oregon courts

Debt collectors are overburdening Oregon courts to pursue debts that consumers may not even owe, according to a new report.

The Center for Responsible Lending study found that debt cases cost Oregonians $18 million a year between 2014 and 2016. Debt buyers, or companies that purchase debt from lenders and other creditors to try to collect on it themselves, are the main culprits. In the past five years, just six debt-buying companies filed more than 75,000 cases in Oregon, accounting for nearly one in four civil suits in the state.

Ezekiel Gorrocino, government relations and policy associate at the Center for Responsible Lending, said collectors don’t have to prove they are targeting the right person for debt.

“This shows how the system is actually rigged in the favor of the debt buyers,” he said, “because the debt buyers, their lawsuits often go uncontested because they sue people without the means to defend themselves.”

Of the 300 cases the center reviewed, only one person hired an attorney and none of them won their case against debt buyers. Although debt collectors sometimes go after the wrong people, debt still is a big problem. Nearly a third of Oregonians have debts in collections and carry a median debt of about $1,400.

Once debt collectors win a case, Gorrocino said, they can start garnishing up to 25 percent of a person’s wages immediately.

“And that is shocking, considering that again, you know, many of these people don’t actually owe the debt,” he said. “So, that is basically what ends up happening. A lot of people actually realize that they have been sued and that they have this judgment against them, because their paycheck basically disappears.”

When it comes to debt collection, the No. 1 complaint from Americans to the Consumer Financial Protection Bureau is that the debt was not theirs. The center said collectors should be required to provide proof of debt with court documents.

The CRL report is online at responsiblelending.org.