Update
Rubber Stamp Injustice in Virginia Courts
Published
New report and Supreme Court case spotlight how debt buyers dominate Virginia’s courts
RICHMOND, Va. — “Over 86,000 Virginians were sued last year by companies they have never done business with—debt buyers. Ninety percent of these lawsuits result in default judgments and potentially severe consequences,” said Jay Speer, Executive Director of the Virginia Poverty Law Center, commenting on a new report and a case argued this week before the Supreme Court of Virginia.
Debt buyers—companies such as LVNV Funding, Midland Funding, and Portfolio Recovery Associates—purchase portfolios of old debt, often credit card accounts, for pennies on the dollar. These portfolios typically contain little or no documentation beyond spreadsheets of names and alleged balances. Even though a debt buyer might pay $50 for a $1,000 debt, it will attempt to collect—and potentially sue for—the full amount.
According to a report from Virginia Poverty Law Center, produced with assistance from The Pew Charitable Trusts, at least 191,679 consumer debt lawsuits were filed in Virginia last year. Debt buyers were responsible for 86,255 of those lawsuits, which accounted for 45% of the total. Further, in Virginia, these cases affect a disproportionate share of people in Black and Latino communities.
The case before the Virginia Supreme Court this week, Mazie Green v. Portfolio Recovery Associates, LLC (Record #250132), highlights the challenges consumers face. For years, Ms. Green fought alone to make a debt buyer prove she owed them anything. Only later did the law firm Kelly Guzzo take her case pro bono. At the hearing, attorney Matt Rosendahl urged the Court to make clear that challenges to debt buyer claims should not be dismissed on technicalities, especially when raised by self-represented Virginians. He cited an amicus brief from Virginia’s legal aid programs that describes many courts as rubber-stamp default judgment mills for debt buyers.
The new VPLC report details the profound consequences Virginians face once sued: added attorney fees, frozen bank accounts, wage garnishment, and—in rare but devastating cases—arrest warrants for failure to appear in court. The report’s findings can inform both legislative reforms and court-based efforts to curb the harm caused by debt collection lawsuits.
See the report here.
Read more analysis on the issue from VPLC attorneys Joanna Darcus and Jay Speer here.
