Creditors filed “upwards of 200,000” debt collection lawsuits in New York State in 2011, according to a report this week from the New Economy Project, a community advocacy group that has sued debt collectors in the past. In many of those cases, debt collectors won default judgments when borrowers didn’t show up in court. One reason for those absences, the New York-based group says, is that creditors engage in so-called “sewer service”—delivering subpoenas down sewer drains instead of to the intended recipients.
The report says that debt collectors often target individuals in minority and low-income communities. A default judgment on a business owner’s personal credit report can come back to bite her business when it applies for credit.
