By: April Kuehnhoff and Cherie Ching. Published by: National Consumer Law Center. Published in: June 2016
Based on a comprehensive survey conducted by the National Consumer Law Center (NCLC) in which 64 civil legal aid organizations participated, this report highlights how these 64 programs are serving vulnerable clients who are being contacted or sued by debt collectors, debt buyers or creditors, and assisting other organizations around the country in evaluating whether and how to offer and improve debt defense services.
Studies show that being represented by counsel in debt collections lawsuits dramatically improves outcomes for consumers, including increasing the likelihood that the case will be dismissed. Having access to legal advice can also play a critical role in alerting consumers to their rights, even if they are not being sued on the debt. Moreover, consumers without access to affordable legal services may turn to predatory debt relief scams for assistance, often with disastrous financial results.
However, consumers rarely have access to legal help when responding to debt collectors. Studies show that between 91 and 99% of consumers are unrepresented by an attorney when they are sued on a debt. Nationally, legal aid programs must turn away more than half of the eligible people who seek their assistance because of a lack of resources. This is largely because federal funding for legal aid for low-income families peaked in 1980 and has declined drastically ever since. This survey found that 94% of organizations listed the lack of funding or staff as a challenge in their debt defense work.
For organizations interested in providing debt defenses services or expand their existing debt-related work, the report provides resources in Appendix B.