Do We Have a Debt Collection Crisis? Some Cautionary Tales of Debt Collection in Indiana

Abstract

The Federal Trade Commission, in 2009, raised issues about debt collection practices and called on jurisdictions to investigate local practices that may be abusive to consumers. This article is the beginning of a larger study of debt collection practices in Indiana. It examines debt collection cases filed in Indiana courts in a three month period of 2009 and 2011 While most research on this issues has been in small claims court systems, this article suggests that the same, if not greater, consumer abuses exist in other courts. The research shows a pattern of large, national debt collection firms moving away from small claims courts, despite the size of the debt being collected. The procedural hurdles in these courts make it easier to obtain judgments and may result in greater abuse to consumers.

Keywords: debt collection, consumer

JEL Classification: K19, K23, K39, K41