The Minnesota State Bar has released a report calling for an overhaul of the legal collections process in the Land of 10,000 Lakes. Consumers are too often confused about how to pay back debts and collection lawsuits disproportinately affect consumers with low-incomes and minorities.
A copy of the report can be accessed by clicking here.
The report makes several recommendations to improve access to justice for consumers in debt litigation, including increasing funding for legal aid organizations, providing more resources and support for self-represented litigants, and implementing reforms to the debt collection industry to reduce abusive practices.
“We want the debt collection process in Minnesota to be fair and dignified,” said Minnesota Attorney General Keith Ellison, in a statement. “The data shows that we’re not doing as good a job as we could in making sure that our courts are a place where everyone gets a fair shot dealing with their debts.”
The report noted the existence of a legal services “gap” where people make too much money to qualify for legal aid, but don’t make enough money to be able to afford a lawyer. To qualify for legal aid, consumers generally must make less than 125% of the federal poverty limit.
Similar to other states, the majority of collection lawsuits in Minnesota end up with a default judgment for the creditor — about two out of every three cases, according to the report. Debt collection lawsuits accounted for more than half of the civil docket in Minnesota, according to the report.
Minnesota has fewer residents in debt than most states, but has more litigious plaintiffs, with one out of every eight debts in collection eventually turning into a collection lawsuit. The idiosyncrasies of Minnesota’s legal system also make it more difficult for consumers to defend against collection lawsuits, according to the report.
