Around 70% of debt lawsuits end in default judgments as collectors flood courts — and most Americans don't even show up
Around 70% of debt lawsuits end in default judgments as collectors flood courts — and most Americans don't even show up.
American households are almost $19 trillion dollars in debt — and debt collectors are going to great lengths to get that money back (1).
A recent report from the Pew Charitable Trusts found that more debt holders are suing debtors in court to get their money back (2). Debt lawsuits dropped in number during the pandemic, but have been climbing rapidly since.
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Pew tracked eight states' debt filings from 2019 to 2025. Of those, only Virginia had fewer filings last year than in 2019. Missouri had the highest spike since 2019 — with cases nearly tripling in 2025.
It's not a coincidence that debt lawsuits have gone up along with credit card delinquencies and living costs (3). But these lawsuits tend to be hard for consumers to navigate — and can come with hefty consequences for failing to do so.
Here's what happens when you're sued for outstanding debt, and what states are doing to make the process better for consumers.
Lester Bird, senior manager at the Pew Charitable Trusts and lead author of the report, said that around 70% of debt lawsuits end in a default judgement on behalf of the creditor. Not all default judgements are due to a borrower not showing up in court, but many of them are.
"We know that people rarely engage in these cases, and when they don't the consequences are severe," Bird told the Wall Street Journal (4). "They can have their wages garnished and bank accounts wiped to zero."
When your wages are garnished, the debt collector can automatically take a percentage of your paycheck away whenever you're paid. How much they can take depends on how much you make. For example, if you make more than $1,256.66 per month, they can take up to 25% of your paycheck (5).
The Consumer Financial Protection Bureau says debt collectors can also put a lien on your property if they get a default judgement (6).
Even fewer borrowers get the help of a lawyer when they're sued by debt collectors, even though they probably should. The Debt Collection lab found that hiring legal help was associated with over a 90% decrease in likelihood of a default judgement (7). But less than 10% of defendants in debt cases have legal counsel (8).
If you're already struggling to pay off debt, hiring a lawyer might seem impossible. But nonprofits like the Legal Services Corporation provide lists of lawyers or legal organizations willing to help low-income clients pro bono or for reduced legal fees (9).
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Debt lawsuits can be hard for people to navigate — almost deliberately so. And if you're being sued by a third-party debt buyer, you might not recognize who's suing you or why you're being sued — making it tempting to just ignore it.
Some states are beginning to take action. Virginia and Washington both recently passed legislation that requires debt lawsuits to be more transparent (10). The law requires filings to include more information about claims against them, and courts have to check to make sure that information is correct.
Other states have passed laws that prohibit debt collectors from taking all of the money out of a debtor's bank account, leaving some money for the debtor's necessities (11).
