Utah uses data to drive debt litigation reform

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For the past three decades, civil courts in Utah and across the country have seen their records overwhelmed with cases in which companies are suing consumers to collect debt. In 2019, debt collection lawsuits were the most common type of civil case in the country. Previous research by The Pew Charitable Trusts has found that in these cases, those sued by large corporations are typically under-resourced and overwhelmed and the resulting lengthy and costly legal proceedings often yield poor results for all parties. .

Utah is one of the few states that make an effort to collect data on debt collection case issues and resolve them in its courts. A new analysis from the Utah Bar Foundation (UBF), conducted with support from Pew, uses state-collected court data on tens of thousands of cases related to credit cards, medical bills, rent and to other debts to assess civil legal proceedings and recommend improvements. . Overall, the study found that Utah courts, like most across the country, deliver life-changing verdicts in thousands of such lawsuits each year with few systems or strategies. in place to ensure defendants can navigate complex court processes, pay judgments or absorb the exorbitant costs of a trial.

For example, data shows that, consistent with national trends, less than 4% of debt collection and eviction defendants in Utah had legal representation in 2019, compared to more than 88% of plaintiffs. And often – again, as in states across the country – defendants do not participate in their cases at all because they do not receive notice that they are being prosecuted, do not understand their rights and obligations or do not cannot afford to commit. These defendants receive a default judgment – an automatic verdict in favor of the plaintiff that is returned when a defendant fails to respond. In 2019, data shows that 71% of debt cases in Utah district courts ended in default judgments, often without confirmation of the facts, including whether the right person was sued for the right amount .

Additionally, UBF’s analysis found that Utah’s policies regarding attorney fees and court-awarded damages often lead to worse outcomes for defendants who participate in a lawsuit against them. only for those who do not. Defendants who respond often end up owing far more than the amount claimed. Data shows that most Utah consumers and tenants are sued for around $1,200, but their cases quickly rack up additional charges: The median district court judgment in claims was 32% over the amount sought in the original folder.

The penalties for eviction are even more severe, involving not only the loss of housing and high legal costs, but also heavy fines. The UBF final report notes that while most states provide 15 to 30 days between eviction notice and move, Utah sets the minimum at just three business days. The state also grants landlords the ability to command three times the daily rent for each day the tenant remains on the property after that. Data shows that Utah courts granted these penalties in 85% of eviction cases filed in 2019. According to the UBF report, Utah is the only state to combine a three-day notice period working days with such high additional damages on demand in evictions.

And in addition to producing such disastrous results for defendants, the court system also does not work well for plaintiffs in debt cases. Complainant companies are the origin of most debt collection cases; only 17% of small claims and less than 1% of district lawsuits were filed by individuals in 2019. And while these entities bring in significant resources and typically win judgments in their favor, they rarely report collecting the amount total judgment. Data shows that from 2013 to 2020, Utah courts issued more than 385,000 judgments, totaling nearly $2 billion, in debt cases, but to date less than half of them have been paid in full. In terms of evictions, 82% of judgments in cases filed from 2013 to 2020 also remained unsatisfied in December 2021.

Taken together, these results indicate that financial institutions and property owners are using Utah’s civil courts to collect debts, but the legal system, as it currently functions, is an inefficient vehicle for this task.

To address the issues, Utah courts have begun implementing significant changes. They have improved the quality and quantity of online resources available to litigants and refined forms to make them easier to understand for people without lawyers, and they are working to make legal aid and other resources more widely available to consumers. In 2020, the Utah Supreme Court opened an Office of Legal Services Innovation and launched a regulatory “sandbox” to test new models of legal services that could benefit consumers. The state has also funded eviction diversion programs and created a process that allows some eviction records to be expunged so that a judgment doesn’t haunt tenants for the rest of their lives.

With these advances in mind, the report offered additional recommendations, including increasing opportunities for settlement before cases go to court, adjusting attorney fees in certain low-debt cases amount and the obligation for plaintiffs to demonstrate that they have legitimate grounds to bring an action, for example by proving that a debt is owed to them by the declared defendant – before granting a judgment by default. The report also encouraged Utah to further refine its data collection so it can continue to identify civil court issues and monitor the changes it has implemented.

Utah’s review of civil court data revealed a system in need of reform, but it also gave courts the information they needed to make improvements. State efforts should serve as a model for how to use effective data collection practices to improve debt litigation and make courts more open, efficient and fair for all.

Erika Rickard is Project Director and Charlotte Stewart is Senior Associate of The Pew Charitable Trusts Civil Legal System Modernization Project.

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