Default Judgments against Consumers: Has the System Failed
![handle is hein.journals/denlr67 and id is 389 raw text is: DEFAULT JUDGMENTS AGAINST CONSUMERS:
HAS THE SYSTEM FAILED?
HILLARD M. STERLING* AND PHILIP G. SCHRAG**
I. INTRODUCTION
The traditional conceptual model of an ordinary civil lawsuit is sim-
ple. A person who believes that he or she has a legitimate claim can file
an action. The defendant is given notice of the claim and an opportu-
nity to be heard, with the help of a lawyer, in the court in which the suit
was filed. A neutral judge decides the case, based on the evidence
presented. Most cases actually result in negotiated settlements,' but
these settlements presumably reflect the relative strengths of each side's
case as perceived by the parties. By appearing in court or negotiating,
defendants participate in the process; relatively few of them lose cases
by virtue of not showing up and allowing default judgments to be en-
tered against them.2
In 1974, Professor David Caplovitz showed that this model is not an
accurate description of what happens to installment plan consumers of
goods and services who are sued by their creditors. His book, Consumers
in Trouble,3 is primarily a study of why consumers fail to make required
payments on installment obligations4 and what happens to them as a
result of subsequent judicial intervention,5 but Caplovitz devoted an im-
portant chapter to the role of courts in the collection process.6
* Member of the District of Columbia Bar. B.A. 1986, Northern Illinois Univ.;J.D.
1989, Georgetown University.
** Professor of Law and Director of the Center for Applied Legal Studies, Ge-
orgetown University Law Center. A.B. 1964, Harvard University; L.L.B. 1967, Yale Law
School. The authors are grateful to Prof. David A. Koplow for his comments on the
manuscript.
1. In the federal system, only 5% of all civil cases are tried. R. COVER, 0. Fiss ANDJ.
RESNIK, PROCEDURE 198 (1988).
2. In the Superior Courts of Maine and Delaware, respectively, approximately 3 and
15% of civil cases end in defaultjudgments. STATE OF MAINE, ADMINISTRATIVE OFFICE OF
THE COURTS, 1987 ANNUAL REPORT 90 (1988); ADMINISTRATIVE OFFICE OF THE COURTS,
1982 ANNUAL REPORT OF THE DELAWARE JUDICIARY 79 (1983).
3. D. CAPLOVITZ, CONSUMERS IN TROUBLE: A STUDY OF DEBTORS IN DEFAULT (1974)
[hereinafter CONSUMERS IN TROUBLE].
4. According to Caplovitz' study, the consumers' problems (such as sudden loss of
income or major illness) were the primary reason for the default 79% of the time, but 21%
of the defaults may have been triggered by some event that implicated the creditor, such as
fraud or a payment dispute. Id. at 53.
5. The efforts by creditors (including wage garnishment) to collect consumer install-
ment debts often cause the debtors to experience health and marital problems, id. at 280-
89, and in some cases (about 8%) lead to the loss of ajob. Id. at 237-42. 15 U.S.C. § 1674
(1988) prohibits firing a worker for a single garnishment, but employees can still be termi-
nated by employers who do not wish to incur the processing costs associated with succes-
sive garnishments.
6. Id. at 191-224.](ViewImageLocal?handle=hein.journals/denlr67&div=30&collection=&method=preview&ext=.png&size=3)
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Default Judgments against Consumers: Has the System Failed
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