Small claims, big abuses

SOME DEBT collectors in Massachusetts assume they can do anything short of strong-arm tactics in pursuit of unpaid bills. They are hardly restrained by the courts, where officials can act like hirelings of the debt collection industry.

An investigation of collection agency practices by the Globe's Spotlight Team has uncovered a world of over-aggressive collectors who manipulate the law, and cowed debtors who are unaware of their rights. Credit card companies and banks increasingly sell off their uncollected debt to third parties who sue debtors by the thousands in the state's small-claims courts. Some of these proceedings have become the modern equivalent of the 19th-century ``sponging house" where sheriffs and bailiffs squeezed cash out of debtors.

Deadbeats don't generate much public sympathy. But few debtors set out with the intention of eluding their bills. Defaults are largely a result of unemployment, illness, divorces , and overextension. Such conditions don't release people from the obligation to pay. But they are not grounds for abuse, either.

Civil courts, including small-claims courts that adjudicate claims of $2,000 or less, are supposed to determine if debts are valid and, if so, how they should be repaid. Yet the Spotlight Team observed two attorneys for the collection agencies calling cases and ordering judgments in a Framingham court where the clerk magistrate was not even present.

Even when court personnel are doing their jobs, collection agencies have the upper hand.

In 2005, there were 122,000 cases filed in small-claims courts in Massachusetts. Roughly 80 percent of people sued for debts don't show up and lose by default, making them vulnerable to property seizure, wage attachments, and arrest warrants. Yet the Spotlight Team found that one contributor to the high default rate may be lack of notice: the courts' failure to ascertain current addresses and be sure defendants know their legal status.

Court officials are aware of the system's flaws and are taking steps to inform debtors of their rights, including the right to keep unemployment and Social Security checks safe from seizure. Efforts are also underway to train court personnel on small-claims procedures and revise rules to make them understandable to the average person. Debtors must also be made aware that they have recourse. Now, they are clueless. In 2005, the Commission on Judicial Conduct heard just one complaint case on a small claim.

In response to the Spotlight series, the Trial Court yesterday upheld every person's right to ``dignity and respect" in court proceedings. That would be a new and welcome day for many defendants in small-claims court.