LIFT (Legal Interventions for Transforming) Wisconsin, a non-profit organization dedicated to increasing access to justice for low-income Wisconsin residents by removing legal barriers, announces the newest addition to its Legal Tune Up Tool (legaltuneup.org). The resource will help individuals address debt collection harassment and answer small claims complaints without the assistance of an attorney.
Between credit card debt, court judgments, medical debt, auto and student loans, millions of Wisconsin residents are struggling financially. Wisconsin ranks above the national average in credit card debt at just over a $5,000 average per resident, more than 50% of residents are living paycheck to paycheck and 20% of residents are burdened by debt in collections. A disproportionate amount of this burden is shouldered by communities of color. Debt in America: An Interactive Map
Creditors that hold unpaid debt often end up pursuing court judgments. Nationwide research shows that a majority of creditors in small claims court are represented by attorneys while less than 10% of alleged debtors have legal representation. Consequently, over 61% of Wisconsin small claims debt cases are uncontested or result in default judgments, exacerbating financial distress for individuals and families. Historically, the WI small claims cases default rate has been around 30% of all case dispositions, but it has more than doubled since 2020, increasing by more than 8,000 cases.
The prevailing reason for these judgments is multifaceted. It includes the frequency of improper or insufficient notice and service from the creditor, the complicated and widely varying local rules regarding the correct way to answer the complaint, and the brief window of time the debtor is given to dispute the creditor’s claim. The end result is often a debt larger than the original amount claimed because court fees and interest are included. Default judgments also mean that inflated claims are not “right-sized”; for example, medical debt for uninsured persons is based upon an inflated list price that no insurance company pays.
Debt collection lawsuits present a significant threat to the economic wellbeing of individual Wisconsinites as creditors can pursue debts for decades, following alleged debtors to new jobs and new savings accounts. Some creditors harass and threaten people, demand larger payments, and disclose debts to employers, co-workers, family members, and friends. These debt collection abuses may result in additional debts, invasion of privacy, job loss, and family instability. Many people feel overwhelmed as there are few resources to address the problem – leaving them trapped in a cycle of financial insecurity, made worse by confusing court procedures that unjustly benefit their creditors.
LIFT WI is working to change this through LegalTuneUp.org: a comprehensive online legal resource designed to equip individuals with the tools and knowledge necessary to effectively navigate small claims court, respond and file answers to contest debt claims made against them, and end debt collection harassment. “ This new addition to the LegalTuneUp tool will be a game changer for the thousands who are saddled with debt but cannot afford the assistance of an attorney to help them resolve the claims. This tool navigates an otherwise intimidating process putting power back in the hands of the people so they can achieve greater economic security.” said Executive Director Erica Nelson
The Consumer Debt resource joins LegalTuneUp’s other resources to reinstate driver’s licenses, remove criminal and eviction records, and right-size child support. This collection of resources that ensures people can solve legal barriers with easy access to public data is unique to Wisconsin, made possible by significant philanthropic investments and partnerships.
The launch of the Consumer Debt resource underscores LIFT Wisconsin’s ongoing commitment to help Wisconsin residents not only understand the legal systems that work against them, but help remove these legal barriers without an attorney. By offering accessible resources and guidance, LIFT Wisconsin aims to lessen the justice gap and empower individuals to take control of their legal health.