Debt Collection Litigation Industry Report 2023: What You Need to Know
US household debt has reached record highs while debt lawsuit volume dropped significantly since 2020. Major debt buyers are now ramping up their purchasing activity, and with reduced consumer liquidity, we predict a dramatic surge in debt collection lawsuits. You need to respond if you're sued to avoid automatic default judgment.
Respond to Your LawsuitYou’re facing a debt lawsuit. You need to understand what’s really happening in the industry.
We analyzed court data from three states to reveal critical trends. You’ll discover why lawsuit volume dropped during the pandemic. You’ll learn why we predict a surge in cases ahead.
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Collectors like LVNV Funding, Midland Funding, and Portfolio Recovery Associates are ramping up lawsuits. You have a deadline to respond. Act now before it's too late.
File Your Answer TodayExecutive Summary: A Storm Is Brewing
US household debt keeps climbing. Yet debt lawsuits in major counties across California, Florida, and Texas dropped significantly since 2020.
Major debt buyers like PRA Group and Encore Capital slowed their purchasing during the pandemic. Now they’re ramping up again.
Based on this gap between rising debt and falling lawsuits, we predict a dramatic increase coming. The economy is stabilizing. Debt buyers are purchasing more portfolios. Consumers have less liquidity than during stimulus periods.
A tidal wave of debt lawsuits is imminent. You need to prepare now.
Where We Got Our Data
We drew from three primary sources for this report.
First, we analyzed docket information from UniCourt covering January 2000 to January 2023. We focused on the five most populous counties in California, Florida, and Texas.
Second, we reviewed collections data from PRA Group and Encore Capital Group. We pulled this from their 10-K forms for fiscal year 2022.
Third, we examined internal data from our partner Solo. We reviewed case outcomes for 177 paying customers by researching court records.
California Courts in Our Sample
- Los Angeles Superior Court
- Orange County Superior Court
- Riverside County Superior Court
- San Bernardino County Superior Court
- San Diego County Superior Court
Florida Courts in Our Sample
- Broward County Circuit and County Courts
- Miami-Dade Court System
- Hillsborough Court System
- Orange County Circuit and County Courts
- Palm Beach Court System
Texas Courts in Our Sample
- Bexar County District Courts
- Dallas County Courts and District Courts
- Harris County Courts, Justice Courts, and District Courts
- Tarrant County Courts and Justice Courts
- Travis County Courts
Household Debt Rose While Lawsuits Fell
Total US Household Debt Hits Record Highs
During the Great Recession, household debt peaked in Q3 2008 at $12.68 trillion.
National debt has now surpassed that previous peak. As of Q1 2023, it reached $17.04 trillion.
Debt has been rising steadily since 2013. Yet lawsuit volume tells a different story.
Debt Lawsuit Volume Decreased in Recent Years
Debt collection lawsuits dropped significantly across all three states we studied. California saw cases skyrocket during 2007-2009 in connection with the Great Recession.
2008 holds the record with 248,217 California cases. Cases then dropped dramatically to 78,897 in 2015.
A steady increase occurred after 2015, rising to 211,130 cases in 2019. But that was still lower than the 2008 peak.
Florida followed a similar pattern. Cases spiked to 88,725 in 2009. Volume decreased to 49,936 in 2014 before rising again.
Unlike California, Florida’s upward trend continued to 2021 with 92,865 cases. It then dropped to 71,498 in 2022.
Texas mirrored these trends. Cases peaked around 2007, rose again to 98,540 in 2019, then decreased.
Why Did Lawsuits Drop While Debt Rose?
In 2020, lawsuit numbers diverged from household debt trends. Lawsuits should have increased with debt. Instead, they decreased.
We see two likely explanations. First, collectors recovered debts more easily during this period. Consumers had higher liquidity from government stimulus spending.
Since collection was easier, collectors used litigation less frequently. Consumers may have delayed lawsuits by paying down balances temporarily.
Second, courts became less accessible. Many courts closed in 2020. Combined pandemic regulations made it harder for collectors to use courts.
Creditors may have avoided negative attention around collecting during the pandemic.
Either way, consumers kept accumulating new debt. Now that stimulus has ended, lawsuits will likely return to pre-pandemic levels or higher.
We estimate 240,000 debt lawsuits have been delayed in California counties alone since 2020.
Original Creditors vs. Debt Buyers
Two Types of Plaintiffs Sue for Debt
Debt collection lawsuits come from two parties. Original creditors include banks and credit card companies. Debt buyers are collection agencies.
Debt buying means purchasing charged-off accounts from creditors. Creditors sell old debt portfolios to buyers.
Buyers typically purchase accounts for a fraction of the original amount. After purchasing debt cheaply, buyers contact debtors to collect the full amount.
Most major debt collection agencies in the US are debt buyers.
Top Plaintiffs From 2000-2023
Eight companies ranked in the top 20 debt collection plaintiffs across all three states:
- Capital One – 440,658 cases total
- Midland Funding LLC – 407,477 cases
- Portfolio Recovery Associates – 379,379 cases
- Discover Bank – 257,073 cases
- LVNV Funding – 186,059 cases
- Bank of America – 183,143 cases
- American Express – 145,239 cases
- Cavalry SPV I, LLC – 134,403 cases
Capital One filed the most lawsuits from 2000-2023. They’re one of the largest retail banks offering credit cards and banking.
Midland Funding is a debt buyer owned by Encore Capital Group. They specialize in purchasing charged-off accounts.
Portfolio Recovery Associates is another major debt buyer. They’re a subsidiary of PRA Group, Inc.
Debt Buyers Became More Aggressive
From January 2022 to January 2023, the landscape shifted. Debt buyers now hold the top positions across all states.
Top plaintiffs from 2022-2023 include:
- LVNV Funding, LLC – 27,369 cases
- Midland Funding – 19,713 cases
- Portfolio Recovery Associates – 19,454 cases
- Capital One – 17,533 cases
- Cavalry SPV I, LLC – 17,439 cases
Debt buyers held the number-one position in all three states in 2022. Historically, Capital One held that position.
Debt buying has increased significantly over the past two decades.
Major Debt Buyers Are Ramping Up Purchases
Debt buyers pay only 4 percent of original debt amounts on average. If they collect the full amount, they make huge profits.
PRA Group and Encore Capital are two of the biggest debt buyers. They purchase millions in debt and collect two to three times as much annually.
PRA Group Collection Trends
PRA Group’s total estimated collections dropped from $1.26 billion in 2013 to $993.2 million in 2015.
Collections rose after 2015, peaking at $1.6 billion in 2018. They then dropped to an all-time low of $773.2 million in 2022.
PRA Group’s purchase price followed the same pattern. They spent $618.7 million in 2013, dropping to $506.3 million by 2015.
Purchase price peaked at $808.1 million in 2017. It decreased to $439.5 million in 2022 as they scaled back purchases.
For 2022, PRA expects to collect $773.1 million on portfolios they purchased for $439.5 million. They have $702.7 million left to collect.
Encore Capital Collection Trends
Encore’s total estimated collections started at $1.75 billion in 2013. They dropped to $925.8 million in 2015.
Collections rose to peak at $1.77 billion in 2019 before dropping to $969.6 million in 2021.
Encore’s purchase price plateaued from 2013 to 2017. It increased thereafter, peaking at $675.9 million in 2019.
Purchase price dropped to $404.8 million in 2021 as they scaled back during the pandemic.
Encore’s report shows an uptick in purchasing in 2022. They’re ramping up for more collections ahead.
Estimated remaining collections are high for both companies. There are billions of uncollected dollars in the queue.
Since consumer liquidity has normalized, collectors will rely more on litigation. You can expect a surge in lawsuits.
Debt Collection Law Firms Represent Creditors
When creditors or debt buyers sue, they hire specialized law firms. These debt collection law firms focus exclusively on representing plaintiffs.
Some debt buyers like Portfolio Recovery and Midland Funding have internal legal teams. Some banks like JPMorgan Chase also have internal attorneys.
Top Debt Collection Law Firms 2000-2023
Five major debt collection law firms dominated from 2000-2023:
- Scott & Associates, PC – 173,857 cases
- Zwicker & Associates, PC – 110,555 cases
- Midland Funding (internal team) – 82,689 cases
- Rausch Sturm LLP – 80,241 cases
- Pollack & Rosen, PA – 79,118 cases
Scott & Associates operates mainly in Texas and California. Zwicker & Associates has offices throughout the US.
Midland Funding’s legal team appeared in the top 20 for all three states.
Top Debt Collection Law Firms 2022-2023
From January 2022 to January 2023, the leaders were:
- Scott & Associates, PC – 33,220 cases
- Midland Funding – 13,924 cases
- Mandarich Law Group, LLP – 12,064 cases
- Patenaude & Felix – 11,872 cases
- Nelson & Kennard – 11,597 cases
Scott & Associates remained in the top spot. New firms joined the ranks in recent years.
Consumers Are Severely Underrepresented
Creditors nearly always have attorney representation. Consumers usually don’t.
In California, the top 20 plaintiff attorneys represented creditors in 614,958 cases from 2000-2023. The top 20 defense attorneys represented defendants in only 12,982 cases.
In Florida, plaintiff attorneys represented creditors in 358,495 cases. Defense attorneys represented defendants in only 27,075 cases.
In Texas, plaintiff attorneys represented creditors in 324,229 cases. Defense attorneys represented defendants in only 46,564 cases.
Research shows less than 10 percent of defendants have legal representation. Nearly all plaintiffs have attorneys.
You’re fighting an uphill battle without help.
How Solo Helps Consumers Fight Back
Our partner Solo was built to give unrepresented consumers a fighting chance. Their mission is closing the justice gap.
Without help, consumers lose by default judgment about 90 percent of the time. They never get their day in court.
They lose automatically because they can’t create and file an Answer document within the deadline.
Solo Has Helped With Over $800 Million in Lawsuits
Solo has helped 135,000 people respond to over $800 million in debt lawsuits.
Top plaintiffs Solo customers have defended against include:
- Discover Bank – 4,741 cases, $45.1 million
- Bank of America – 3,747 cases, $43.7 million
- LVNV Funding LLC – 7,401 cases, $31.7 million
- Capital One – 4,164 cases, $28.9 million
- American Express – 1,765 cases, $28.5 million
Solo helps consumers defend against creditors, banks, and debt buyers alike.
Solo Customers Experience Favorable Outcomes
Solo customers avoid default judgments. After they respond, one of three outcomes occurs.
Based on a sample of 177 paying customers:
- 25% of cases were dismissed after filing an Answer
- 32% of cases moved to discovery or are pending
- 36% resulted in judgments (including stipulated settlements)
- 7% settled without judgment
Nearly 25 percent of cases get dismissed after merely filing an Answer. These cases likely had insufficient evidence.
Pending cases are victories too. Many customers use the service to buy time for bankruptcy or settlement discussions.
Some judgments were actually stipulated judgments from settlements. Settlement without judgment occurred in 7 percent of cases.
Consumers using Solo achieve favorable outcomes more than 64 percent of the time.
Solo Works With Over 4,200 Courts
Solo has helped customers file into over 4,200 courts throughout the US. They maintain a database of popular civil courts.
28 percent of these courts require defendants to pay filing fees. These fees are egregious.
In California, you might pay up to $450 just to respond to your lawsuit. Court clerks are rarely aware of fee amounts.
Fee schedules are usually only available online as PDFs. Solo’s database includes these fees automatically.
A Tidal Wave of Lawsuits Is Coming
Since 2019, household debt has continued to swell. Debt lawsuit volume has decreased dramatically.
As conditions normalize post-pandemic, we expect lawsuit volume to return to pre-pandemic levels. It will likely continue rising.
Major debt buyers are ramping up their purchasing. Consumers have less liquidity than during stimulus periods.
Courts are fully accessible again. Collectors will rely more heavily on litigation.
A tidal wave of debt lawsuits is imminent. You need to act now if you’re facing a lawsuit.
Don’t become a default judgment statistic. Our partner Solo can help you respond to your lawsuit and fight back.