People Have Stopped Paying Their Bills - Now They're Being Sued (Video)

In this 7 October 2026 published videos, host Michael Bordenaro talks about the growth in debt collerctions.

A combination of record-high consumer debt, cheaper automated legal technologies, and aggressive third-party debt buyers has triggered a massive surge in debt collection lawsuits across the United States. Total credit card debt has soared to $1.25 trillion, driving delinquency rates up and prompting original creditors and collection agencies to turn to state civil courts to claw back unpaid funds. There are a few primary factors fueling this wave of litigation. 

Debt-buying corporations use data analytics and AI to purchase past-due accounts for pennies on the dollar, quickly scrubbing consumer profiles to identify who is most likely to have garnishable assets. A staggering percentage of consumers ignore court summonses, allowing debt buyers to win default judgments automatically. In the debt collection industry, this is highly profitable because an uncontested case allows immediate access to aggressive collection tactics. Credit card balances over $1,000 and complex medical bills remain the top reasons people are taken to court. In extreme cases, consumers face devastating financial consequences, such as families sued for hundreds of thousands of dollars over nursing home bills via archaic “filial responsibility” laws. 

Ignoring a debt collection lawsuit does not make it go away. Once a creditor wins a default judgment in court, they gain broad authority to seize assets. Employers can be legally ordered to withhold up to 25% of an individual’s disposable paycheck to pay off the debt directly.
Creditors can freeze bank accounts and withdraw funds to satisfy the judgment, sometimes leaving consumers with a zero balance. A lien can be placed against a person’s home, preventing them from selling or refinancing the property until the debt is paid off. 

Consumers are not entirely powerless, and several state and federal interventions are emerging to help manage debt. Filing a formal response forces the collector to legally prove they own the debt and that the amount is accurate. Many collectors drop the suit if challenged because they lack the proper paperwork. Every state has a legal window—typically ranging from 3 to 6 years—during which a creditor can sue for a debt. If the debt is older than the state’s threshold, the lawsuit can be dismissed. Some states are passing legislation to protect vulnerable consumers. For example, Virginia enacted bipartisan reforms that shield minimum cash balances (up to $1,000) from being entirely wiped out by a bank levy. Consumers struggling to stay afloat can seek assistance through non-profit credit counseling, structured debt management plans, or seek financial protection under bankruptcy laws (Chapter 7 or Chapter 13).