What is a Default Judgement
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A default judgment is a summary judgment issued by the courts when the defendant in a civil case has not shown up in court. In the world of judgment collection, this typically means that a debt collection agency takes a consumer to court, the consumer doesn’t appear at the date and time of the hearing, and the judge rules in the debt collection agency’s favor. The judge rules “by default” because there’s no one there to present the consumer’s side of the story.
Sounds straightforward, right? In fact, it’s anything but simple. Debt collection agencies – or the attorneys who represent them – often file dozens or hundreds of lawsuits each month against consumers. The rules of the game say that the plaintiff (the debt collector) has to notify the defendant (the consumer) of the lawsuit against him or her, as well as the date and time of the scheduled court appearance.
The problem is that debt collectors often don’t have accurate contact information for the consumer. In these cases, the debt collector sends the notification to the wrong person, and the consumer being sued never hears about it, which results in a default judgment. This is particularly true of debt buyers who purchase written-off debt for pennies on the dollar. This old debt has often passed through so many hands that accurate identifying information has gotten lost along the way.
Abusive Default Tactics by Debt Collectors
There’s another tactic that unscrupulous debt collectors use, and it’s called “gutter service.” In these instances, process servers attest to having served consumers with notifications, but actually simply throw them away (“into the gutter”). This results in a summary judgment. Obviously, consumers never know they’re being sued if they never receive a summons.
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The flip side of the equation is when the wrong person is sued. This happens frequently. Again, this is often because identifying information about the consumer and the debt in question become uncoupled. The person being sued knows that he doesn’t owe a debt, and so assumes it’s a case of mistaken identity and doesn’t appear in court.
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Whichever scenario is in play, it has been argued that debt collection agencies file a multitude of lawsuits and obtain default judgments as a way of playing a high-stakes poker game. Essentially, it’s a win-win situation for debt collectors. Either the consumer shows up in court and they pressure him or her to work out a payment plan or settlement on the spot in exchange for dismissing the suit, or the consumer doesn’t show up and the judge grants a summary judgment to the debt collector.
Compounding the problem is that in most instances, the debt collector isn’t required to prove to the judge hearing the case and issuing the default judgment that the debt is valid. Moreover, the debt collector has virtual free rein to add exorbitant collection fees and interest, upping the ante for judgment collection.
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