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Collection claims abuses move up to higher courts

It was 2009 when the state's highest court moved to curb abuses by debt collectors in small claims courts. Since then, debt collection attorneys have been required to certify they have sued debtors at the correct address and have evidence that the debt is actually owed.

But the Supreme Judicial Court did nothing to provide the same protections to the tens of thousands of debtors who are sued in the civil sessions of the 62 district courts and the Boston Municipal Court.

And since the rules were toughened in small claims, debt collectors have filed an increasing proportion of their lawsuits in district courts, according to an extensive Globe search of court filings.


Without the tougher rules, there is evidence that some of the district court defendants are never notified they have been sued — just the sort of abuse that was once commonplace in small claims and one reason that about 90 percent of defendants lose by default.

In response to questions raised by the Globe, the chief justice of the district court system, Paul C. Dawley, ordered a sweeping review of the rules. Last month the court system issued a proposal to have district courts adopt the same regulations already in effect in small claims court.

In addition, Dawley and the chief justice of the Boston Municipal Court, Robert Ronquillo Jr., implemented the use of a "plain English'' summons effective Feb. 2, a document that makes it much clearer to people being sued what their rights and responsibilities are.

"It is important that individuals involved in civil cases receive notice of claims and that they understand their rights and obligations when sued," Dawley said in a statement.

The changes will affect numerous consumers.

A Globe analysis of court records last year found that there were 1.9 million lawsuits filed in small claims and district court sessions across the state between 2004 and 2013 — with a sharp upward spike during the Great Recession. By conservative estimates, at least 1.2 million were filed by professional debt collectors. And the overwhelming majority of those were for credit card debt.


One measure of the outcome: Lawyers for eight of the largest filers of debt collection lawsuits placed liens on 57,574 homes in Massachusetts in those 10 years, according
to Registry of Deeds records. Homeowners cannot sell or refinance their homes without satisfying the court judgments.

The eight creditors are Citibank, Capital One, Midland, Discovery, Portfolio Recovery Associates, FIA, CACH, and CACV. They are a mix of credit card issuers and companies that buy and collect old credit card debt.

In 2006, a Globe Spotlight Team series, "Debtors Hell," documented widespread abuses by debt collectors that often occurred in the presence of court clerks, who preside at the informal small claims sessions instead of judges.

Small claims courts were originally intended for small tradespeople, homeowners, and the like, to resolve financial disputes for amounts up to $2,000 without the need to hire lawyers. (That limit was boosted to $7,000 in 2010.)

In many cases, the Spotlight Team found that consumers were sued at the wrong addresses. In some courts, clerks browbeat debtors into making payment agreements they could not afford, and even threatened debtors with jail. A handful of debt collectors, armed with court judgments, hired constables and sheriff's deputies to seize debtors' cars in the pre-dawn hours, and then sold them at auction.


Three years later, the Supreme Judicial Court imposed changes to give debtors more protection, but left untouched the district courts and Boston Municipal Court, where half or more of the civil lawsuits filed involve delinquent credit card debt, according to a Globe analysis of filings in seven district courts and the estimates of court officials.

In the municipal court and the 62 district courts, where lawsuits up to $25,000 are allowed, debtors have long been at an enormous disadvantage if they do not have lawyers. The summons was so opaque and laden with legalese — including a common 18th century declaration, "Herewith" — that even sophisticated consumers were befuddled. Up to 90 percent of debtors simply failed to respond, according to the Globe review. That means debt collectors have been winning judgments by default.

At municipal court, which is under separate jurisdiction than district courts, attorneys with the Volunteer Lawyers Project and Harvard Law professor James Greiner have found evidence that some civil claims appear to have been sent to defendants' old addresses.

As part of its efforts to lower the default rate, Volunteer Lawyers Project last year mailed notices to about 300 people who had been sued to determine what sort of notification might prompt more defendants to respond to the lawsuits. In the process, researchers compared the addresses used by plaintiffs to the addresses of defendants in a commercial database.

Greiner, who has a PhD in statistics, said that when researchers looked at the first 87 cases, they found 28 where the address used by the plaintiff did not match the defendant's address contained in the commercial database. In 14 of those cases, the plaintiff had filed with the court an address that appeared to be the defendant's prior address.


Greiner cautioned that no conclusion could be drawn from such a small sample. "I find this information concerning, but not definitive," he said.

Debt collection lawyers, the Globe found, have preferred district court for the greater advantages they have had — even when they could have filed lawsuits in small claims sessions.

The seven district courts where the Globe reviewed cases are in Springfield, Worcester, Lowell, Malden, Quincy, Brockton, and Plymouth. Together they serve 21.3 percent of the state's population.

Even after the small claims limit was raised to $7,000 in 2010, the percentage of debt collection lawsuits filed the following year in the seven district courts — 54 percent — was identical to that of the year before, evidence that debt collectors preferred to keep cases in district courts.

Moreover, the Globe's examination of 750 civil lawsuits filed in the seven courts by the eight creditors in 2012 found that 44 percent were for amounts under $7,000.

If the new rules in district court level the playing field, that may be a good omen for defendants — if they can be persuaded to appear. That is because plaintiffs have to prove they owe the debt. And while debt collection lawyers will have to provide the account number and last amount owed, that may not be enough proof.


Since most credit card debt has been sold at least once, plaintiffs often do not have sufficient evidence that defendants owe a particular debt. And they seldom have a copy of the contract signed to obtain the credit card. In those circumstances — if defendants dispute the claim — courts routinely dismiss lawsuits.

Any drop in the default rate may be good for consumers. But if debtors in large numbers decide to take advantage of their day in court, the already overburdened district courts and Boston Municipal Court might well be swamped.

"If half the defendants appeared in court, it would put the system in turmoil,'' said Greiner. But in the interests of justice, he added, "the courts should welcome that strain, and the Legislature should give the courts sufficient funding to make sure that the rights of litigants are protected."

Reporting for this article was done for a seminar in Investigative Reporting at Northeastern University. Also contributing were Alexander LaCasse, Haley Hamilton, and Adam Anticaglia. Walter Robinson's e-mail address is walter.robinson@globe.com