In 2010, New York City enacted a new law to help prevent sewer service. We hope it goes far enough, because sewer service is worse today than ever – some 300,000 debt collection suits were filed, and in about 80% of them, default judgments[1] were obtained. The majority of those involved debt collectors that pay process servers an average of $5 per service.
Why does this happen? As a report by South Brooklyn Legal Services makes clear, for debt collectors and debt buyers, “sewer service,” makes good business sense. Debt buyers, such as Encore, Asta Funding, Asset Acceptance and Portfolio Recovery Associates, are seeking to collect from consumers who have been telling their creditors for months, if not years, that they are in financial distress and cannot pay. Indeed, only seventeen out of every 100 debt collection cases generate any income. But through powerful weapons such as wage garnishment and bank account restraints, debt collectors are able force even the most financially strapped consumers to pay something.
But in order to use these weapons, debt collectors must first get a judgment, and for debt collectors and debt buyers such as Capital One, LR Credit, Palisades, CACH and Gemini, who file thousands of cases a year, the quickest and cheapest way to do it is to get a default judgment. As the SBLS report says, “In short, paying process servers low wages that ensure sewer service makes good business sense.”
-Sheril Stanford
[1] A default judgment is judgment that is obtained against a defendant who does not file and serve an answer and appear in court to defend himself, often because he was never served with a copy of the summons and complaint due to “sewer service.”