As debt collection lawsuits clog state and local courts, efforts are underway to help strapped consumers using new legal protections and, in some cases, help from artificial intelligence.
Collection suits may result from old debts, but they add to the stress people are feeling today from high gas and grocery prices, said Lester Bird, senior manager of courts and communities at the Pew Charitable Trusts and a co-author of a report this month on collection lawsuits.
“More cases means more financial distress for people now, when people are feeling more pinched,” Mr. Bird said.
Debt collection suits are filed by businesses or debt collectors when borrowers fail to pay a credit card bill, a medical bill or other debt. A debt judgment can have serious consequences for borrowers, like having money withheld from their paycheck or taken from a bank account.
Increasingly, past-due accounts that the original lender or business has written off are purchased at a discount by large debt-buying firms, which may sue to collect the money, Mr. Bird said. Delinquent debts may be bought and sold multiple times; because the name of the company filing suit is often different from the borrower’s familiar credit card company, the borrower may ignore notices about the debt, Mr. Bird added.
“They think it’s a scam,” he said.
If debtors don’t show up at court, they often lose the case by default, which can lead to having their paychecks docked. Few debtors are represented by lawyers in these cases.
What’s behind the rise in collection lawsuits?
Several factors may play a role, researchers said, including Americans’ rising debt levels. Credit card debt rose to $1.25 trillion in the first three months of this year, from $1.18 trillion a year earlier, while the share of borrowers with a collection account on their credit report worsened slightly, to 5 percent, according to the Federal Reserve Bank of New York.
Technology has made it easier for debt buyers to purchase and analyze large batches of past-due accounts, making it possible to eke profits from cases with smaller balances, said David Freeman Engstrom, a Stanford law professor who studies debt collection and eviction cases. (Last year, a report from the National Center for State Courts raised the possibility that filing systems using A.I. could be partly driving an increase in debt claims.)
“It’s incredibly easy, and the marginal cost has gone down,” Professor Engstrom said. Debt collection actions are the most frequently filed civil suits in state courts, he said, adding, “Courts are choking on these cases.”
The number of collection suits fell during the pandemic years of 2020 through 2022 but have surged since then, Pew reported, citing research on eight states by January Advisors, a data science consulting firm. In 2025, collection suits in Alabama, Massachusetts, Minnesota, Missouri, North Dakota, Texas and Utah exceeded prepandemic levels (Virginia was the exception), with some states seeing new highs. Utah debt filings, for instance, are on track to exceed their most recent peak, which occurred after the Great Recession.
The same trend was apparent in seven of nine major metropolitan areas tracked by the firm, including St. Louis County in Missouri, where filings nearly doubled between 2019 and 2025, Pew reported.
What are states doing to help borrowers?
This year, Virginia joined more than a dozen other states that require banks to shield minimum amounts of cash in consumer accounts affected by debt collection judgments. Virginia’s law, which took effect July 1, protects at least $1,000 in a consumer’s bank account from seizure; people don’t have to appear in court to request the protection.
The Virginia law doesn’t provide debt forgiveness, Mr. Bird said. Rather, borrowers have a cushion to cover basic expenses while paying off their debt.
Some states have also adopted laws to help consumers more easily understand why they’re being sued, by whom and what they can do to defend themselves. Virginia and Washington State passed legislation this year requiring that collection companies seeking default judgments document that the correct person is being sued and actually owes the debt, and that the suit is within the statute of limitations (often, three to six years from when the borrower stopped paying). The laws, which take effect next year, also require courts to confirm the documents’ accuracy, Pew said.
Donald Maurice, outside counsel to the Receivables Management Association International, a trade group for debt buyers and collection firms, said its members would prefer to settle directly with borrowers rather than suing them, because court is expensive. “A lawsuit is the last resort,” he said.
He also said new rules in some cities that cap the number of calls collectors can make to delinquent borrowers, like one that will take effect in New York City in September, could lead to more lawsuits.
“That’s going to create less communication and less opportunity for resolution,” he said.
Can A.I. help courts manage the crush of suits?
Even when states require specific documents, the deluge of debt complaints can overwhelm staff and hamper a thorough review, the Pew report said, possibly leading to improper judgments against borrowers.
To fix that problem, some courts are trying A.I. tools to speed up and improve the review of documents. The Superior Court of Los Angeles County, the nation’s largest trial court, has a partnership with Stanford Law School that includes testing the use of A.I. to evaluate debt collection claims.
An initial study by Stanford legal and computer science researchers showed that reviewing case documents with A.I. support could reduce errors by 53 percent and time spent by 33 percent, compared with reviews done without A.I. help.
The Superior Court has seen its debt collection caseload “skyrocket” in recent years, Rob Oftring, a court spokesman, said in an email. He said that the project was in its early stages and that any new tool would be tested rigorously, emphasizing “a thoughtful and cautious approach that recognizes artificial intelligence’s limitations, risks and potential impacts.”
Where can I get help managing my debt?
Nonprofit credit counseling groups can analyze your budget and spending — typically, free of charge — to help keep you on track. They may also, for a fee, negotiate a debt management plan in which credit card companies agree to let borrowers pay off their debt over several years at a lower interest rate.
Titus Milan, 28, an e-commerce manager in Texas for an air-conditioning company, said he had sought advice from ChatGPT on managing his debt — which led him to receive help online from Money Management International, a nonprofit debt counseling firm. (He uses a paid version of the chatbot, and asked it to direct him to “low risk” debt management options.)
Mr. Milan said his card debt had ballooned to about $15,000 — at about 26 percent interest — after he moved to a new apartment and bought furniture and other items. He was able to enter a repayment plan that reduced his overall interest rate to 10 percent and put him on track to clear his debt in three to four years. (He is still paying off some card debt outside the formal plan.)
Money Management International noticed an increase in online referrals from ChatGPT this spring, said Tom Nitzsche, a company spokesman. In May, when ChatGPT’s personal finance platform was released, the company recorded 3,000 referrals, up from about 1,000 in April. (Money Management International doesn’t advertise on the tool, although it could, Mr. Nitzsche said.)
While consumers increasingly seek financial advice from A.I. services, privacy experts are raising concerns about sharing sensitive personal or financial information with the tools. You can find nonprofit credit counseling groups online directly, through the National Foundation for Credit Counseling or the Financial Counseling Association of America.
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