A default judgment is the legal version of a forfeit victory. When the defendant doesn’t “show up” by filing an answer to lawsuit so the plaintiff wins by default. Debt collectors like Midland Credit Management, Inc. (“Midland”) and Portfolio Recovery Associates, Inc. (“PRA”) rely on default judgments. These debt collectors know consumers usually file no response with the court in a collection suit.
Consumers fail to respond, calling filing an answer in legalese, for several reasons. It is too stressful. They think owe the money. They can’t afford an attorney. Some consumers even believe failing to respond will stop the lawsuit until they do.
Debt collectors need consumers to default to make a profit. Midland and PRA file thousands of lawsuits each year in Texas courts. Litigating each case would quickly suck all the profit out of collecting these debts. Instead, these businesses rely on the knowledge that consumers will fail to respond over 75% of the time.
When consumers fail to file an answer, the consumer gives up their best opportunity to resolve debt. The resolution could be beating the debt collector’s case, or settling for less than full value owed, or correcting the debt collector’s inaccurate requests. Once a debt collector has turned a debt into a judgment, the debt collector has far more leverage to use against a consumer. And the consumer has far fewer ways of challenging inaccuracies.
Once a debt has become a judgment, a debt collector can use the courts to freeze bank accounts, seize non-exempt property, and make it difficult to buy or sell property.
Failing to respond to a lawsuit rarely makes the situation better and frequently makes it much worse.
* Almost never. I can think of some far-fetched circumstances when failing to respond is the best option but that happens very rarely. In any case, consult with a lawyer. Hiring a lawyer isn’t’ cheap but consulting a lawyer usually is.