Virginia legal aid programs challenge debt buyers’ predatory practices in Virginia 

Wednesday, May 29th, 2024

By Jay Speer, VPLC Executive Director

Last week Virginia legal aid programs and the Virginia Trial Lawyers Association filed an amici (friend of the court) brief in a case before the Virginia Court of Appeals challenging the shady practices of Portfolio Recovery Associates (PRA) and other debt buyers that has led to over $217 million in default judgments against Virginians over the past four years.   

The modern business of buying delinquent or charged-off debts from creditors and other debt has become so routine that tens of millions of people across the United States either owe money to a debt buyer or have in the past.  Debt buyers “purchase vast portfolios of bad debts” from original creditors or other debt buyers for “just pennies on the dollar These debts are bought and sold, often several times over, sometimes for a just a fraction of a penny on the dollar.   

Debt buyers flood the General District Courts with debt collection actions, obtain default judgments, and then regularly issue garnishments on those default judgments. In this way, debt buyers marshal the power of the state to seize wages from hard working Virginians. Defendants who are financially able to afford counsel, or lucky enough to secure a legal aid lawyer if they cannot, have excellent chances of successfully defending themselves from a debt buyer’s alleged claims. But very few defendants ever obtain counsel, underscoring the critical importance of the Court of Appeals decision.  Ninety percent of the judgments that debt buyers obtain in Virginia are default judgments and over 90% of the garnishments they issue are based on those default judgments.   

You get what you pay for, goes the adage, and debt buyers are no exception. The steep discounts at which debt buyers purchase debts reflect the poor quality of documents—or more accurately, the lack thereof—and information that they receive about the underlying debts.  As spelled out in the court order, a predictable result of debt buyers filing a high volume of lawsuits based on imperfect information is that lawsuits are regularly filed after the right to collect debts has expired or that seek to collect a debt that is not owed.

It is fundamental to our system of justice that everyone, with no exception, must present reliable evidence in court before the court’s power is used to impose judgments and take personal property.  PRA asks Virginia courts to waive rules about proof that a debt is owed and the amount of that debt—they ask for special treatment.   PRA has grown accustomed to not having to support their claims with admissible evidence since most defendants do not come to court.

It is time to put a stop to this abuse of our court system.

VPLC is grateful for the pro bono assistance of Consumer Litigation Associates and Kelly Guzzo.  Kelly Guzzo is representing the appellant Mazie Green before the Court of Appeals and Consumer Litigation Associates co-authored the amici brief. 

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