Debt collection lawsuits in Minnesota and a new VLN clinic to help address the problem

The debt collection industry is booming. Unifund, one of the big U.S. debt buyers, files nearly 5,500 lawsuits a year in California. In Minnesota, where pocket filing makes the cost of obtaining a default judgment negligible, I would expect to see similar, if not greater, per capita figures. And, of course, it is not just Unifund filing lawsuits.

Because of pocket filing, coupled with Minnesota’s permissive pre-judgment garnishment rules, most of these lawsuits are never filed. Law firms like Messerli & Kramer; Gurstel, Staloch & Chargo; Wolpoff & Abramson; and others serve dozens, if not hundreds, of lawsuits every month for Unifund and other clients, counting on default judgments.

Of course, most of their “clients” (in quotes because some debt buyers are companies affiliated with the law firms that represent them) cannot even prove they own the debt, much less that a particular debtor owes the debt. And sometimes neither is true. I hear of numerous cases where a debtor pays off a debt, only to receive a call from another debt collector on the same debt a few weeks or months later.

Because of the size of the problem, it is crucial that everyone who has been sued by debt buyers is referred to someone who can counsel them and help them fight the debt buyer lawsuit, if appropriate.

I recently worked with the Volunteer Lawyers Network to establish a debt collection defense clinic. The clinic is a “brief services” clinic available to those who do not qualify for full representation (up to 300% of the federal poverty guidelines). We use some very good forms, including an answer and discovery requests, and will help clinic clients answer discovery requests from the debt collector. We counsel clinic clients what to expect and try to help them represent themselves competently so they can get the lawsuit against them dismissed or settle it on good terms.

Contact the Volunteer Lawyers Network at volunteerlawyersnetwork.org or by calling 612.752.6677. VLN can also help consumers in garnishment or those who are already in default through other clinics.