Debt collection cases are flooding Utah’s state courts, new data shows
Utah’s state court system, like many across the country, is increasingly burdened with debt collection cases, according to a new report from the Utah Bar Foundation and Pew Charitable Trusts.
These cases often pit individual defendants who owe small amounts of money against companies like high-interest lenders and credit unions. In 2019, for example, just six plaintiffs accounted for approximately 50% of all district debt claims. All were collections agencies, which typically buy debt for a fraction of their original amount but sue consumers for the total cost plus collection fees.
The report reviewed data on more than 755,000 cases between 2013 and 2019, the last “normal year” before pandemic relief programs like rental assistance and eviction moratoriums went into effect.
In many cases, the report found debtors were required to pay much more than they originally owed, due to both legal fees and, in eviction cases, Utah’s landlord-friendly laws. It noted Utah is one of 12 states that gives renters just three days to either pay all past due rent and fees or move out before their landlord can begin tacking on additional fees — known as treble damages.
While the median amount renters faced with eviction owed was $654, the median amount they needed to pay after a court judgment was $4,000 — mostly because of treble damages.
In a panel discussion Tuesday, former chief justice of the Utah Supreme Court, Christine Durham, said she was struck by the imbalances the data revealed. She noted that legal fees accumulated in district courts suggest it might be cheaper for debtors not to show up at all.
“As a judge, I know that it's always best when all parties participate in a dispute to ensure a fair outcome,” she said. “Our system is disincentivizing debtors to participate in their own cases.”
Pew’s Erika Rickard said Utah’s data mirrors national trends, which also shows debt collection cases are becoming the most common type of civil court case. The shift has gone largely unnoticed by state leaders, she said, mostly because of a lack of data. But in Utah, the change has profound implications for taxpayers and consumers.
“This is the first state where we've been able to look this closely across the system statewide to understand what happens behind courthouse doors."
The report also came with several recommendations for improvements. They include increasing opportunities for settling a case before it goes to court and giving courts more oversight of the process after a decision is made.