Industry representatives and consumer advocates collectively lamented the high non-appearance rate of debtors in court in debt collection cases at yesterday’s joint FTC-CFPB roundtable on the debt collection industry. The non-appearance rate is around 90% according to most observers, as reported in the FTC’s report on debt collection litigation, Repairing A Broken System. To debt collectors, who do not want to be in court in the first place, non-appearance is another missed opportunity to contact the debtor and try to reach a negotiated settlement. To consumer advocates, non-appearance too often results in default judgment and wage garnishment and liens for consumers.

As a model solution to the non-appearance problem, Judge Annette Rizzo, who sits on the Court of Common Pleas in Philadelphia (First Judicial District), pointed to the First District’s innovative and successful Residential Mortgage Foreclosure Diversion Program. The Program requires conciliation efforts before a consumer’s home can go through a Sherriff’s sale. The Program has been successful in increasing appearance rates by consumers, a result which Judge Rizzo attributed to multiple outreach efforts, including face-to-face outreach by door-knocking housing counselors, to get consumers to call a hotline where they can begin the conciliation process.

Although it is unclear whether such a program could be directly translated to other debt collection cases, industry representatives spoke positively of the importance of trying new ways to contact debtors, particularly if the contact is face-to-face.

Somewhat surprisingly, the consumer lawyer on the panel emphasized instead that additional documents should be required before courts proceed to issue default judgments. Indeed, several states have changed court rules and procedure in recent years to require additional documentation.

In response, panelists representing the debt collection industry responded that documents they provide are reliable, as they are subjected to considerable regulatory oversight, and it is not a question of finding the “magic formula” of the right documentation. Each state and jurisdiction, each acting independently, could complicate the ability of lenders and debt collectors to design systems to deliver the documents required by each jurisdiction. Rather, efforts should be focused on getting the debtor to show up. Industry, consumer advocates, and courts should jointly work to proactively engage debtors, including by personal outreach, to educate debtors and bring them into the process so they can understand and assert their rights.