FTC issues report on debt collection reform

The Federal Trade Commission (FTC) issued a report this week, recommending significant litigation and arbitration reforms to the system for resolving consumer debt collection disputes.

One of the main problems with debt collection disputes, according to the FTC, is the fact that courts frequently grant default judgments against consumers who do not appear in court to defend themselves. The FTC recommends that states consider adopting measures to make it more likely that consumers will defend themselves in litigation, decreasing the number of default judgments.

Louise Story, finance reporter for The New York Times, talks about the glaring problems with our debt collection system and, specifically, the law firms that specialize in debt collections, sometimes assigning thousands of cases to a single lawyer.