Utah Is Using Data to Drive Debt Litigation Reform

Over the past three decades, civil courts in Utah and across the country have seen their dockets overwhelmed by cases in which businesses sue consumers to collect a debt. As of 2019, debt collection lawsuits were the most common type of civil case in the nation. Previous research from The Pew Charitable Trusts found that, in these cases, individuals being sued by large companies are typically under-resourced and outmatched and that the resulting costly, lengthy court proceedings often yield poor outcomes for all parties.

Utah is one of the few states working to gather data on and address issues related to debt collection cases in its courts. A new analysis by the Utah Bar Foundation (UBF), conducted with support from Pew, uses state-collected court data on tens of thousands of credit card, medical, rent, and other debt-related cases to assess civil court processes and recommend improvements. Overall, the study found that Utah courts, like most others across the country, render life-altering verdicts in thousands of these suits each year with few systems or strategies in place to ensure that defendants can navigate complex court processes, pay judgments, or absorb the steep costs of a court case.

For instance, the data shows that, in keeping with national trends, less than 4% of debt collection and eviction defendants in Utah had legal representation in 2019, compared with more than 88% of plaintiffs. And oftentimes—again, as in states across the country—defendants don’t participate in their cases at all because they don’t receive notification that they are being sued, do not understand their rights and obligations, or can’t afford to engage. These defendants receive a default judgment—an automatic verdict in favor of the plaintiff that is rendered when a defendant does not respond. In 2019, data shows that 71% of debt cases in Utah district courts ended in default judgments, often without confirmation of the facts, including whether the right person was sued for the right amount. 

Further, the UBF analysis found that Utah’s policies regarding attorney fees and court-awarded damages often lead to worse outcomes for defendants who participate in a suit against them than for those who do not. Defendants who respond often end up owing far more than the outstanding debt claimed. The data shows that most consumers and renters in Utah are sued for around $1,200, but their cases quickly rack up additional fees: The median district court judgment in debt claims was 32% higher than the amount sought in the initial filing.

Eviction penalties are even more severe, involving not only the loss of a home and high court costs, but also harsh fines. UBF’s final report notes that, whereas most states offer 15 to 30 days between notice of eviction and move-out, Utah sets the minimum at just three business days. The state also grants landlords the option to command three times the daily rent for each day the renter remains on the property after that. Data shows that Utah courts awarded these penalties in 85% of eviction cases filed in 2019. According to the UBF report, Utah is the only state to combine a three-business-day notice period with such high additional damages on demand in evictions.

And in addition to producing such disastrous outcomes for defendants, the court system does not work well for debt case plaintiffs, either. Corporate plaintiffs are behind most debt collection cases; only 17% of small claims, and less than 1% of district court claims, were brought by individuals in 2019. And although these entities bring significant resources to bear and typically win judgments in their favor, they rarely report collecting the full judgment amount. The data shows that from 2013 through 2020, Utah courts issued more than 385,000 judgments, totaling nearly $2 billion, in debt cases, but as of this writing, fewer than half of those have been paid in full. In evictions, 82% of judgments from cases filed from 2013 to 2020 remained similarly unsatisfied as of December 2021.

Taken together, these findings indicate that financial institutions and landlords are using Utah’s civil courts to collect debts, but the legal system, as it currently operates, is an ineffective vehicle for the task.

To address the issues, Utah’s courts have begun implementing important changes. They have improved the quality and quantity of online resources available to litigants and refined forms to be easier to understand for people without an attorney, and they are working to make legal aid and other resources more widely available to consumers. In 2020, the Utah Supreme Court opened an Office of Legal Services Innovation and launched a regulatory “sandbox” to test new models of legal services that may benefit consumers. The state has also funded eviction diversion programs and created a process that allows certain eviction case records to be expunged so that a judgment does not haunt renters for the rest of their lives.

With those advances in mind, the report offered additional recommendations, including increasing opportunities for settlement before cases come to court, adjusting attorney fees in certain low-dollar debt cases, and requiring plaintiffs to demonstrate that they have legitimate grounds to sue—such as by proving a debt is owed to them by the stated defendant—before rendering a default judgment. The report also encouraged Utah to further refine its data collection so it can continue to identify civil court issues and monitor the changes it has implemented.

Utah’s examination of civil court data revealed a system in need of reform, but it also gave courts the information they need to make improvements. The state’s efforts should serve as a model for how to use effective data collection practices to improve debt litigation and make courts more open, efficient, and equitable for all.

Erika Rickard is a project director and Charlotte Stewart is a principal associate with The Pew Charitable Trusts’ civil legal system modernization project.