Hannah Locklear | June 23, 2023
Coauthored by George Simons
At SoloSuit, we converse daily with people who have negative monetary net worth and have been sued by the world’s largest multi-billion dollar banks. We wanted to know the prospects of these people, our customers, and people like them. So, we wrote this report.
The goal of this report is to compare previous trends in debt collection cases to current trends and to predict debt collection lawsuits to come as a reflection of the US economy’s current state.
Whereas US household debt has continued to increase, the number of debt lawsuits filed in the most populous counties of California, Florida, and Texas has decreased significantly since the onset of the pandemic. Debt purchasing as reported by two of the major debt buyers in the US, PRA Group, Inc. and Encore Capital Group, Inc., also slowed after the beginning of the pandemic but has recently begun to accelerate.
Based on this increase in US household debt and simultaneous decline in debt lawsuits since the COVID-19 pandemic hit, we suspect a dramatic increase in debt lawsuits in the next few years is imminent as the economy recovers from the pandemic’s effects, debt buyers purchase more debt portfolios, and consumers return to pre-pandemic spending habits.
SoloSuit is positioned to help consumers resolve their debts, and will do so in partnership with creditors, collectors, and courts.
The data in this report primarily comes from three sources: aggregated docket information from Unicourt, 10-Ks, and internal data from SoloSuit.
In order to represent the US debt litigation industry, we took a sample size of debt collection litigation data from the five most populous counties in California, Florida, and Texas. The data was pulled from UniCourt, which collects data from State and Federal courts throughout the US. We extrapolate from this data to infer national trends.
The data ranges from January 2000 to January 2023 and was pulled from the following courts, unless otherwise noted.
We also analyzed collections data from two major debt buyers, PRA Group, Inc. and Encore Capital Group, Inc., pulled from each corporation’s 10-K form from the fiscal year ending in December 2022.
Finally, we present internal data from SoloSuit. This includes anonymized and aggregated customer inputs and research from the court case outcomes of 177 paying SoloSuit customers. Case outcomes were collected internally by searching online court records and calling court clerks.
During the Great Recession, US household debt peaked in Q3 of 2008, at $12.68 trillion. National debt has now surpassed that previous peak and has risen to $17.04 trillion as of Q1 of 2023.
The volume of debt collection lawsuits has decreased in recent years in the most populous counties of California, Florida, and Texas. This section displays graphs representing debt collection lawsuits filed in the most populous counties of California, Florida and Texas from 2000-2023.
Debt collection lawsuits in California skyrocketed in 2007-2009 in connection with the Great Recession. 2008 holds the record for most California debt collection lawsuits in the last twenty-three years, with a recorded total of 248,217 cases. Over the succeeding years, instances of California debt collection cases dramatically dropped as the nation’s economy recovered, with the lowest instances occurring in 2015 at 78,897 cases. A steady incline of debt lawsuits occurred after the low of 2015, rising in 2019 to 211,130 cases, which was notably still lower than the 2008 peak.
The trendline for debt collection cases in Florida is similar to that of California. Florida debt collection lawsuits spiked in 2009, reaching 88,725 cases. Volume then decreased to 49,936 cases in 2014 before again starting to rise. Unlike in California, in Florida the upward trend continued to 2021 with 92,865 cases before dropping to 71,498 in 2022.
Note: The graph above shows data pulled from the Dallas County Courts, Dallas County District Courts, Harris County Courts, Harris County Justice Courts, and Harris County District Courts. Data from Bexar, Tarrant, and Travis counties were not available for these years.
The trendline in Texas is again similar to that of California and Florida. Cases peaked around 2007 and then rose again in 2019 to 98,540, before decreasing over the last few years.
In each of these states, debt lawsuits increased as US household debt also increased, until around 2020.
In 2020, however, the number of debt lawsuits in each state diverged from the trend of national household debt. Instead of the number of lawsuits increasing with the amount of household debt, the number of lawsuits decreased. This delta concerns us. Over the past two years since the onset of the pandemic, the number of debt lawsuits should have continued to increase, instead it decreased. We consider two possible reasons to be most likely.
As explained in a later section, collectors recovered debts more easily during this period because consumers had higher liquidity due to government stimulus spending and policies. Since collection was easier, collectors likely did not use litigation as frequently to collect. It is also possible that consumers merely managed to delay lawsuits by paying down balances with their short-lived liquidity.
Alternatively, debt lawsuits may have decreased because courts became less accessible. For a period in 2020, many courts were closed. Combined pandemic regulations may have made it more difficult for collectors to use courts. Also, creditors may have wanted to avoid negative attention around accessing courts for the purposes of collecting debt during the pandemic.
Either way, even though consumers were paying off collections more frequently during this period, they didn’t stop amassing new debt. And now that consumer liquidity is down as stimulus spending has slowed, debt lawsuits will likely return to pre-pandemic levels or higher. The delta between the number of lawsuits that occurred and the number of lawsuits that would have normally occurred could represent the number of lawsuits that are due as stimulus spending decreases and the economy returns to normal. For example, in the California counties alone, we estimate 240,000 debt lawsuits have been delayed since 2020.
We predict that the increase in household debt over the past several years will bring with it a delayed wake of debt collection lawsuits in each state and likely across the country.
This section displays data that represents debt collection lawsuits filed in 2022 in the most populous counties of California, Florida and Texas.
As illustrated, California debt collection cases were filed at a steady rate throughout 2022, with a small increase during the summer months of June-August and a decline at the end of the year in December. The Fed reported a steady increase in household debt with each quarter of 2022. However, the rate of California debt collection cases remained level as household debt increased.
Florida debt collection case filings remained consistent throughout most of 2022, but the numbers plummeted in the last two quarters. Florida debt collection cases peaked in June with 7,716 cases, and from there, cases steadily dropped throughout the rest of the year, reaching as low as 3,834 cases by the end of December. Like California’s numbers for 2022, Florida’s debt collection cases do not follow the trends in household debt as reported by the Fed. With each quarter, the household debt increased in 2022, but Florida debt collection lawsuits decreased in the latter half of the year.
Texas debt collection case trends in 2022 experienced an opposite effect when compared to Florida, with the numbers consistently increasing throughout the year at 4,484 cases in January, peaking at 7,789 cases in October, and ending with 6,046 cases in December.
Debt collection lawsuits are generally initiated by one of two parties: the original creditor or a debt buyer. Creditors and lenders are usually banks or credit card companies, while debt buyers are considered debt collection agencies.
Debt buying is the practice of purchasing charged-off or delinquent accounts from creditors and lenders. Creditors compile old debt accounts into portfolios and sell them to debt buyers who typically purchase these accounts for a fraction of the original amount. After purchasing the debt for a fraction of its value, the debt buyer contacts the debtor to collect on the full debt amount. Most of the major debt collection agencies in the US are debt buyers.
This section displays data that represents the top 20 parties in debt collection lawsuits and the number of cases they filed, as reported in the most populous counties of California, Florida and Texas from 2000-2023.
This graph shows Capital One USA filed 285,161 cases in the California counties from 2020-2023.
This graph shows Capital One Bank filed 100,288 cases in the Florida counties from 2020-2023.
This graph shows Portfolio Recovery Associates, L.L.C filed 104,532 cases in the Texas counties from 2000-2023.
Case data shows there were some key players in the debt collection industry from 2000-2023 in the most populous counties in California, Florida, and Texas. 8 companies ranked in the top 20 debt collection parties for each of the three states analyzed: Capital One, Midland Funding LLC, Portfolio Recovery Associates LLC, Discover Bank, LVNV Funding, Bank of America, American Express, and Cavalry SPV I, LLC.
Below, we describe each of these parties and the number of debt collection cases they filed across the three states, according to our sample data.
The following section displays data that represents the top 20 parties in debt collection lawsuits, based on the number of cases filed, in the most populous counties of California, Florida and Texas from January 2022 to January 2023.
This graph shows Cavalry SPV I, LLC filed 13,317 cases in the California counties from January 2022 to January 2023.
This graph shows LVNV Funding, LLC filed 7,428 cases in the Florida counties from January 2022 to January 2023.
This graph shows LVNV Funding, LLC filed 11,773 cases in the Texas counties from January 2022 to January 2023.
Eleven key players in the debt collection litigation industry ranked in the top 20 plaintiffs for each state from 2022-2023. Below, these key players are listed in order of the number of cases filed:
Only two of the key players from 2022-2023 were new when compared to the key players from the past two decades: Synchrony Bank and Jefferson Capital Systems. Synchrony Bank is an online bank that finances credit cards for a variety of industries, including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. Jefferson Capital Systems is one of the nation’s leading debt buyers and collection agencies.
In comparing the major debt collection parties list from the 2000-2023 data to the 2022-2023 data, it is clear that debt buyers have become more prominent in debt collection lawsuits than creditors or banks. Debt buyers held the number-one position in all three states in 2022, whereas Capital One, an original creditor, held the position historically.
The data from this section suggests that the prevalence of debt-buying has increased over the past two decades.
When purchasing old debts from creditors and banks, debt buyers pay only 4 percent of the original debt amount on average. If they can collect the full amount from the consumer, they make a huge profit. PRA Group, Inc. and Encore Capital Group, Inc. are two such debt buyers that purchase millions of dollars worth of debt and collect two to three times as much in revenue annually.
PRA Group, Inc. is a global debt buyer and one of the biggest debt purchasers in the United States. Headquartered in Virginia, PRA Group, Inc. operates in the US, Canada, Australia, and throughout Europe. Portfolio Recovery Associates LLC is the US subsidiary of PRA Group, Inc. and one of the top debt collection agencies in the US since 2000.
Encore Capital Group, Inc. is one of the largest debt buyers in the United States. Both Midland Funding and Midland Credit Management, Inc. are subsidiaries of Encore Capital Group, both of which are key players in the US debt collection industry.
The line graphs below show debt collection trends from PRA Group, Inc. and Encore Capital Group, Inc. as reported in each corporation’s 10-K form from the fiscal year ending in December 2022. PRA Group, Inc. reports collection trends combining data from the US, Canada, and Australia, so the graph below depicts such trends. As for Encore Capital Group, Inc. the graph below depicts data solely collected from the company’s US subsidiary, Midland Credit Management, which performs collections activities for Encore’s other US subsidiary, Midland Funding.
The data for the graphs is organized by portfolio. So, each year shows the data relevant to the debt portfolio purchased in that year. The following are definitions of some of the trends analyzed in these graphs.
Both PRA Group, Inc. and Encore Capital Group, Inc. reported that collection trends have been unusual over the past few years. In 2022, total gross collections decreased for both companies. This was a result of two factors. One, both corporations scaled back their debt purchases. And, two, consumer liquidity normalized: consumers no longer have access to as much government stimulus spending as they did in 2021.
PRA Group’s total estimated collections dropped from $1.26 billion in 2013 to $993.2 million in 2015. This number rose again after 2015, hitting its peak in 2018 at $1.6 billion. After 2018, total estimated collections steadily dropped again until hitting an all-time low in 2022 at $773.2 million.
As for PRA Group’s purchase price, trends matched the ebb and flow of total estimated collections, beginning at $618.7 million in 2013 and dropping to $506.3 million by 2015. Purchase price increased again after 2015, peaking at $808.1 million in 2017 and decreasing to an all-time low of $439.5 million in 2022 as PRA Group decreased its debt purchases in response to the COVID-19 pandemic.
Predictably, estimated remaining collections increased over this same time period, beginning at a baseline of $17.2 million in 2013 and rising to $702.8 million by the end of 2022.
So for 2022, PRA expects to collect $773.1 million on portfolios it purchased for $439.5 million in that same year, and it has $702.7 million left to collect. The amount remaining to be collected is higher for more recent years because it takes time to collect on these debts: a significant amount remains uncollected on the 2022 portfolio because it was only recently purchased.
Encore Capital Group’s total estimated collections started at $1.75 billion in 2013, dropped to $925.8 million in 2015, and rose again to its peak at $1.77 billion in 2019 before it dropped again to $969.6 million in 2021 as an effect of the COVID-19 pandemic.
Encore Capital Group’s purchase price of nonperforming loans started out at a plateau from 2013 until 2017, and started to increase thereafter, peaking at $675.9 million in 2019 and dropping again to an all-time low of $404.8 million in 2021 as the corporation scaled back on debt purchases in response to the COVID-19 pandemic. Note that from 2019-2022, purchase price trends mirrored total estimated collections trends.
As we would expect, Encore Capital Group’s actual collections are lower on more recent portfolios and its estimated remaining collections are higher for more recent years. Again, it takes time to collect on purchased portfolios. The amount remaining to be collected for the 2022 portfolios is $1.1 billion.
As illustrated by these graphs, the total estimated collections and actual collections reported by PRA Group, Inc. and Encore Capital, Inc. correspond with trends in US household debt and the number of debt collection lawsuits filed in our samples from California, Florida, and Texas. As seen in both graphs, collections numbers declined from 2013 to 2015, gradually increased until hitting a peak in 2018 and 2019, and dropped again after the COVID-19 pandemic hit.
For both companies, estimated remaining collections are high, especially in recent years, showing that there are billions of uncollected dollars in queue. Since household debt has risen but debt lawsuit volume has decreased, this has created a large delta representing money that collectors will attempt to collect in the near future. Encore Capital Group’s report shows an uptick in purchasing in 2022, suggesting they are ramping up for more collections in the future. We expect this trend to continue and that PRA Group will follow suit. Finally, since consumer liquidity has normalized, these collectors will need to rely more on litigation to collect these debts.
When original creditors or debt buyers become plaintiffs by suing to collect on a debt, they hire law firms to represent them. Most law firms involved in debt lawsuits specifically specialize in debt collection litigation. Also known as debt law firms, these organizations focus on representing creditors and debt-buyers in debt collection cases. Debt law firms have a systematic approach to debt collection.
Some debt collection agencies, like Portfolio Recovery Associates and Midland Funding, also have internal legal teams that take on accounts escalated to litigation. Likewise, some banks and creditors also have internal legal teams like JPMorgan Chase Bank.
The following section displays data that represents the number of debt collection cases filed by the top 20 law firms representing plaintiffs in the most populous counties of California, Florida and Texas from 2000-2023.
Much like the debt collection parties, there are several key players for debt collection representation. These key law firms stand out in terms of the number of debt collection cases filed from 2000-2023 in the most populous counties of California, Florida, and Texas. Below, we identity five of the major debt collection law firms according to the combined data:
Scott & Associates, PC mainly operates in Texas and California, but from 2000-2023 it is clear that this law firm filed most of its debt collection cases in Texas. On the other hand, Zwicker & Associates has offices in several states throughout the US, and its firm appeared in the top 20 debt collection law firms in California, Florida, and Texas. Similarly, Midland Funding’s legal team operates throughout the US, and it also appeared in the top 20 debt collection law firms for all three states analyzed.
The graphs below present data that represents the number of cases filed from January 2022 to January 2023 by the top 20 debt collection law firms in the most populous counties of California, Florida, and Texas.
Based on the data from 2022-2023, the major players for debt law firms filing debt lawsuit cases from the states analyzed are:
Scott & Associates remained in the top spot with the most debt collection lawsuits filed in 2022-2023. Likewise, Midland Funding remained one of the leading debt collection law firms throughout 2022-2023. Mandarich Law Group, Patenaude & Felix, and Nelson & Kennard all joined the ranks as some of the leading debt collection firms based on our data from California, Florida, and Texas.
Whereas creditors and collectors nearly always have attorney representation in debt collection cases, consumers usually do not. This section displays data that illustrates attorney representation in debt collection cases in the most populous counties of California, Florida and Texas from 2000-2023. More specifically, it shows the number of debt cases taken by the top 20 attorneys representing plaintiffs and the top 20 representing defendants, and compares the numbers for each.
In California, the 20 most popular plaintiffs attorneys represented plaintiffs in 614,958 debt collection cases from 2000-2023, while the 20 most popular defense attorneys represented defendants in 12,982 cases.
In Florida, the 20 most popular plaintiffs attorneys represented plaintiffs in 358,495 debt collection cases from 2000-2023, while the 20 most popular defense attorneys represented defendants in only 27,075 cases.
In Texas, the 20 most popular plaintiffs attorneys represented plaintiffs in 324,229 debt collection cases from 2000-2023, while the 20 most popular defense attorneys represented defendants in only 46,564 cases in the same time period.
This data could be interpreted to suggest that defendants hire a larger variety of attorneys. But we find it illustrates that defendants are underrepresented in debt collection cases. It corresponds with research that shows less than 10 percent of defendants are represented in these lawsuits.
SoloSuit was built to give unrepresented consumers in debt lawsuits a fighting chance. Our mission is to close the justice gap by making people superhuman at winning disputes.
Without SoloSuit, consumers lose by default judgment about 90 percent of the time. They never get their chance in court. They lose automatically because they can’t figure out how to create and file an Answer document within the deadline. With SoloSuit, consumers avoid default judgment by filing their Answer in court on time.
Beyond just responding, SoloSuit helps consumers achieve good case outcomes. We do this in part by partnering with courts and collectors.
SoloSuit has helped 135,000 people respond to over $800 million in debt lawsuits. The following table shows the top aggregate amounts in controversy and number of cases that we have helped consumers defend per plaintiff. The amount in controversy is based on inputs from our customers.
|Bank of America, N.A.||3,747||$43,700,000|
|LVNV Funding LLC||7,401||$31,726,000|
|Capital One, N.A.||4,164||$28,917,000|
|American Express National Bank||1,765||$28,494,000|
|Midland Credit Management, Inc.||6,194||$24,458,000|
|JPMorgan Chase Bank, N.A.||1,857||$23,761,000|
|Portfolio Recovery Associates, LLC||5,162||$21,686,000|
|Wells Fargo Bank, N.A.||1,364||$16,361,000|
|Velocity Investments, LLC||1,411||$15,079,000|
|U.S. Bank National Association||520||$12,044,000|
|Cavalry SPV I, LLC||1,730||$10,505,000|
|OneMain Financial Group, LLC||822||$6,830,000|
|Jefferson Capital Systems, LLC||1,175||$5,980,000|
|Goldman Sachs Bank USA||439||$5,482,000|
|Absolute Resolutions Investments, LLC||658||$5,477,000|
|Crown Asset Management, LLC||767||$4,772,000|
|UT Federal Credit Union||323||$4,682,000|
|Credit Acceptance Corporation||363||$4,496,000|
According to our data, SoloSuit helps consumers defend themselves in debt lawsuits against creditors, banks, financial institutions, debt collection agencies, and debt buyers alike. SoloSuit is working with these organizations to find creative ways to resolve these debts.
SoloSuit customers avoid default judgments. Once they respond to the lawsuit, one of three outcomes occur: the case is dismissed and the customer wins, the customer loses, or the customer settles.
The graph below is based on the review of case outcomes of a sample of 177 paying SoloSuit customers. Because courts do not make their outcomes available in a uniform and scalable way, this review requires intensive manual research, making it prohibitive to review the outcomes for all of our cases.
Surprisingly, nearly 25 percent of cases are dismissed after the defendant merely files an Answer. This high dismissal rate suggests these cases were initiated with insufficient evidence or they were filed against defendants who didn’t owe the debt.
32 percent of cases either move to discovery or are waiting for the next step in the lawsuit process, having effectively prevented a default judgment. We consider “pending” cases to be a victory for our customers as many customers use SoloSuit to “buy themselves” time — usually to file for bankruptcy or discuss debt settlement options.
In 36 percent of cases, the plaintiff was awarded a judgment against the consumer. This category includes various types of judgments. Summary judgments were awarded early in some cases. Some judgments were awarded at the end of a case after a hearing. A few default judgments were granted when the customer failed to use our service effectively before their deadline. Many of these judgments were actually stipulated judgments which are filed frequently when a settlement is reached.
In 7 percent of cases, a settlement without a judgment was recorded. These settlements likely resulted from a lump-sum payment for a fraction of the debt. These agreements may have been initiated by the defendant or the plaintiff.
In summary, consumers use SoloSuit to respond to debt lawsuits and successfully overcome the first hurdle of default judgment. From there, most SoloSuit customers go on to achieve favorable outcomes such as dismissal, settlement, extension of the lawsuit, or stipulated judgments more than 64 percent of the time. We are actively engaged in making these outcomes even better for all customers by partnering with courts to file documents effectively.
SoloSuit has helped customers file documents into over 4,200 courts throughout the US. SoloSuit maintains a database of all of the most popular civil courts in the country that have jurisdiction over debt lawsuits. We use this database to automatically calculate filing information, including court mailing addresses, style requirements, and filing fees.
28 percent of these courts require the defendant to pay a filing fee to avoid losing their debt lawsuit by default judgment. SoloSuit’s database includes these filing fees, which are egregious. For example, in California, a defendant may have to pay up to $450 just to respond to their lawsuit. It is prohibitively difficult for consumers to calculate their own filing fees as court clerks are rarely aware of the fee amounts, and the fee schedules are usually only available online as a PDF.
The map below shows the range of filing fees for each state.
Since 2019, national household debt has continued to swell to new heights, whereas debt lawsuit volume has decreased dramatically. As conditions normalize post-pandemic, we expect to see lawsuit volume return to pre-pandemic levels and to continue to rise.
As such, we predict a tidal wave of debt lawsuits is imminent. SoloSuit will be here to help mediate between consumers and collectors, having extensive experience assisting consumers in responding to debt lawsuits involving the nation’s top creditors and collectors.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
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