In almost every other state, a debt collector must file a lawsuit either immediately or within a short time after serving the summons and complaint. This means the court has an eye on the lawsuit, and the debt collectors must pay the “entry fee” if they want to use the considerable power of the court system to collect on a judgment.
Not so in Minnesota. In Minnesota, debt collectors get to use the power of the court system without telling the court. This includes the power to take money away from a consumer by garnishing their wages or bank accounts. It is kind of like taking the gavel for a joyride.
Minnesota has a pocket filing rule (also called hip pocket service), that allows debt collectors to start lawsuits without notifying the courts. All they have to do is pay a process server $20 or so to drop off the summons and complaint at—cross your fingers—a defendant’s last-known residence.
Twenty days later, if the defendant did not answer, she has lost the case, which means she owes the money (whether or not she actually owes the money, whether or not the debt collector could have proved its case, and whether or not the debt collector added fees it does not have the right to collect).
Forty days later, the debt collector can start garnishing the debtor’s bank accounts or wages, still without filing the lawsuit.
And here is the kicker: because the debt collector can start garnishment without filing the lawsuit to get a judgment from the court, the debt collector will continue to calculate interest at the original credit card rate—probably 20-30%.
Debt collectors will only file the lawsuit if they find money, because then they already know they will get paid.
It is a little like fishing for cash. Toss out a line—sue a consumer—and see if they bite—fail to respond. If they bite, it’s money for dinner!
In Minnesota, all you need to go fishing for cash is a fill-in-the-blank set of court pleadings and a lack of scruples.
Because it is so cheap and easy, there is a lot of suing going on. Debt collectors filed 36,000 default judgments last year. Only the collectors know how many other lawsuits they started but did not file because they came up empty when they went looking for bank accounts.
It is so cheap and easy, it makes sense for debt collectors to sue every consumer they can, add on all the fees they can, figure out if the consumer has any money to take, and file the lawsuit only if they do.
Who put these rules in place? The Minnesota Supreme Court is responsible for some, the legislature for others. Both have—intentionally or not—made the debt collection industry feel very welcome here.
If you are a debt collector, Minnesota is a pretty nice place to be.
To find a consumer or bankruptcy lawyer, use the Caveat Emptor Consumer & Bankruptcy Lawyer Directory.
{ 5 comments… read them below or add one }
Quote: “Debt collectors will only file the lawsuit if they find money, because then they already know they will get paid.”
I don’t know if this is necessarily true. I received one of these summons which I mistook for a demand for payment and not recognizing the debt nor knowing my right to require validation of their claim, set it aside. This was early in 2007. Just last week, I received an Order for Disclosure from the courts. I never received any document of default judgement, but the Order for Disclosure was forwarded from an old address. I have 0 assessts and a $10.00 an hour job, which, if I am garnished, will probably cause me to lose my rental housing and car, because I won’t be able to afford to pay for either, much less gas, utility, phone. Food is out of the question.
So, I don’t think they look very deeply into the financial probability of a debtor’s affluence or lack thereof.
I am writing to the courts to ask for a copy of the judgement, since I never received one and so I don’t even know what I am liable for.
As I said, bummer for me for not realizing the precariousness of my position to begin with. Now I know, should I ever need to assert my rights in future.
Thank you for your blog. I hope it informs many before it is too late.
Perhaps I should have said they “often” do not file unless they find money. Sometimes they file in the hope that they will find money at some point.
Absolutely shocking! I’m glad I don’t live in Minnesota!
Close your bank accounts, or just wait a little till the banks close their own doors. No one will have money to go after. See how the whole world is going down the drain. Meanwhile go plant some food in big pots so that you can take your garden with you wherever you live.
I am facing a lawsuit with Capital One as the Plaintf and the Gurstel etal law firmas their attorney, specifically Michael Johnson. I have to file my Answer, Interrogatories, etc. I have learned much in my reserach on debt collectors. It would be worth running for Mn. public office to expose the debt collectors for who they are. It is dispicable and an embarrassment for MN. Some mentioned the “pocket lawsuits” which means you are served once a S&C and you have to serve your Answer, only to find out that the S&C was never filed…it was a fishing exhibition, just like most of the discovery requests.
Everyone harmed by the Gurstell law firm in a debt collection lawsuit specifically with Capital One as the Plaintiff and see what we can with that information. Debt collectors in general should hang their head in shame. The debt collectors are making BIG BUCKS…the big bucks should be seized and paid back to the consumers hurt in the lawsuits and judgments!
I have to get through tomorrow filing all this stuff. I do not have the money to pay for the filing fee so that makes it even more interesting.