Debt Collection Cases Double in Northern Illinois

The number of debt collection cases in Cook County, Illinois has doubled since 2000 to about 130,000, according to a story Sunday in the Chicago Tribune, “Debt Collectors Pushing to Get Their Day in Court.”

Cook County includes Chicago and the city’s residents make up the “vast majority” of those being sued by debt collection firms, according to the paper.

Last year, collectors received 60,699 default judgments when the accused debtor didn’t show up for his court date.

Robert Markoff, president of the National Association of Retail Collection Attorneys (NARCA), told the paper, “Most people know they owe the money … but for whatever reason they choose not to show up.”

The increase in suits is due to the rise in credit card debt which has grown 75 percent in the last 10 years to more than $940 billion. In addition, debtors are more likely to tell collectors to stop contacting them to work out a payment program, Rozanne Andersen, general counsel of the collectors’ trade group ACA International told the paper.

The story highlights one court room, that of Cook Co. Circuit Judge Daniel Gillespie, where the number of suits against alleged debtors have doubled in the last two years to about 12,000. Gillespie says that the people being sued “are not deadbeats … These are real people with real problems.”

The story recounts several incidents where judges threw out suits by collection attorneys because the statute of limitations had expired or the debt had been settled.

Collection attorneys have an advantage because defendants do not have lawyers in the small claims courts were most of the cases are heard, according to the Tribune. The paper notes that collection industry revenues tallied about $15.5 billion in 2006, according to industry consultant Kaulkin Ginsberg Co.

The legal collection strategy has been increasingly popular in the debt collection industry as major publicly traded ARM companies, such as Portfolio Recovery Associates and Asset Acceptance, have been targeting courts to increase portfolio liquidation. The strategies have grown so quickly that consumer attorneys are now targeting the practice in court, with little success so far (“Judge Dismisses Challenge to Legal Collections Tactic,” March 20).