A new report unveiled by the National Consumer Law Center (NCLC) last week, highlights the importance of debt defense programs in providing critical civil legal services to economically vulnerable consumers. While consumer debts used to be collected primarily outside of the court system, debt collectors now rely heavily on lawsuits as a means of collecting debt. In fact, because of the large number of debt collection cases filed in our courts, DC Superior Court has set aside entire dockets to deal solely with consumer debt collection cases.
Although every debt collector appears in court with experienced counsel, defendants are generally unaware of the difference a lawyer can make and virtually never come to court represented by counsel. In what the Federal Trade Commission described as a “broken system,” debt collectors take advantage of the uneven playing field by suing on time-barred debts, filing suits based on incorrect or insufficient evidence, failing to notify consumers of suits, and garnishing exempt funds from bank accounts.
As NCLC’s report explains, “studies show that being represented by counsel in debt collection lawsuits dramatically improves outcomes for consumers, including increasing the likelihood that the case will simply be dismissed. Having access to legal advice can also play a critical role in alerting consumers to their rights even if they are not being sued on the debt. Moreover, consumers without access to affordable legal services may turn to predatory debt relief scams for assistance, often with disastrous financial results.”
Recognizing the considerable need for representation and systemic reforms in debt collection cases, Legal Aid began focusing on abusive debt collection practices in 2012. By placing legal services lawyers at the courthouse to provide same-day representation, Legal Aid has assisted hundreds of low-income consumers identify legal defenses, assert counterclaims, retain protected income, and reach fair settlement agreements.
As spotlighted in the report, Legal Aid also provides non-legal assistance to economically vulnerable clients by working in conjunction with a certified financial coach who was placed in its office through the Consumer Financial Protection Bureau’s Financial Coaching Initiative. Staff attorneys can refer clients to this in-house resource for help pulling credit reports, budgeting, managing debt, or assistance addressing other financial needs or goals.