$700 might seem like a lot to pay for 10 school lunches, but that’s what debt collectors and a county court in Washington are demanding from Dr. Christina Johnson-Conley after her $30 check bounced last year.
The mother of two says she was never served with court paperwork and did not know that the debt had been brought to court, according to local news reporters at KOMONews.com. School district officials say they tried twice to reach Johnson-Conley by mail before giving up and selling her debt to Grimm Collections, a private debt collector in the area. Grimm eventually took her to court, where a judge ruled that she would have to pay $535 to clear the debt.
With interest, court costs, Grimm’s own fee, and other fees added in, Johnson-Conley’s total tab is $695. Her wages are being garnished as part of a subsequent court order. If Johnson-Conley’s reported claim that she was never served with court papers is true, she has grounds to challenge the judgment against her.
The debt collection industry has earned a reputation for failing to provide clear and adequate information to the people they pursue, and regulators and journalists have documented a number of cases in recent years where defendants didn’t know they were being sued over debts until a judge had already ruled against them.
There is no evidence that Grimm violated Johnson-Conley’s due process rights in this case, and a company spokeswoman told KOMONews that their policy is to try to resolve debts by phone and mail first before taking nonresponsive debtors to court. The company did not immediately respond to a request for details on how they conduct collections efforts and who they rely upon to serve court papers to debtors they sue. Grimm boasts an A+ rating from the Better Business Bureau, a grade that means it is responsive to consumer complaints it receives.
The collections industry has enjoyed a “regulatory void” until very recently. The Consumer Financial Protection Bureau is beginning to tighten its oversight of debt collectors after decades where the businesses existed in cracks between various financial regulators and laws. The new scrutiny comes at a time when roughly one in seven Americans has a debt in collections and several states have begun to allow people to be jailed over debts.
Activists are hoping that a greater awareness of how the collections industry operates will spark a significant shift in how American society treats debt. The very existence of the collections market, where debts are sold for pennies on the dollar, indicates that debts are worth less than what creditors are told to pay, according to organizers of The Debt Collective. That Occupy Wall Street offshoot hopes to convert debtors into a new mass movement modeled on the labor movement, and use collective action against financial institutions to greatly reduce the payments millions of Americans make to banks, collectors, and lenders.