Consumers who don’t rely on debt consolidation or other options to reduce their debt may increasingly find themselves on the receiving end of lawsuits. And it’s all thanks to technology. The New York Times recently reported on the growing number of law firms across the country that rely on computer software to prepare legal cases against consumers who owe their clients unpaid debts. The software helps law firms take on a huge number of cases a year in a fraction of the time. Proponents say this is efficient, and is the fastest way to get creditors the money they’re owed. Opponents say that the automated cases clog courtrooms and that they’re not always based on information that is completely accurate.
The New York Times story cited the Woodbury, N.Y.-based law firm of Cohen & Slamowitz. The firm has specialized in the field of debt collection for nearly two decades. These days, the law firm is busier than ever thanks to software that automatically prepares their debt collection lawsuits. According to the Times story, Cohen & Slamowitz, with just 14 lawyers on staff, has been filing about 80,000 debt collection lawsuits a year. That’s an amazing number, working out, as the Times story says, to more than 5,700 cases for each lawyer. This is a boon to the firm, but it’s not so great for the nation’s court system, which is becoming overwhelmed with lawsuits filed to collect consumer debt.
The technology behind these automated cases has also earned its share of criticism. Many complain that these automated lawsuits, while quick and efficient, rely on inaccurate or incomplete information about the debtors involved in the cases. Other times, the cases misstate the amount that debtors owe, or fail to take into account any newer payments that debtors make. This all adds up to further clog an already burdened legal system. Many critics say that the nation’s courts need to be freed from the ever growing number of debt cases.
The Debt Consolidation Solution
Debt consolidation programs can serve as at least a partial solution to these problems. When consumers consolidate debt, they take all their monthly payments and combine them into one. They then stay clear of collection agencies so long as they make this single, affordable, payment on time each month. While debt consolidation isn’t perfect – it lowers consumers’ credit scores and often comes with high interest rates and fees – it is better than forcing debtors to go to court. There might not be such a need for debt collection lawsuits, automated or otherwise, if more consumers work with debt consolidation companies.