Debt Collectors and Forum Shopping
“I’m pretty much the insurance company judge,” says Judge A. Douglas Stephens, a self-described “Renaissance redneck” who wears a gun strapped to his ankle when sitting on the bench. MarketWatch reports that debt collectors are successfully forum-shopping for judges who will give them wide leeway to recover against small debtors’ assets. Small differences in the hospitability of courts to collectors can have a significant impact on the value of debts, which sell at large discounts. Small debts sell for only 2 cents on the dollar in Texas — a less hospitable forum — compared with 7 cents in Indiana (where Judge Stephens hangs his robes). Some townships impose filing fees that may create an incentive for courts to accommodate plaintiffs’ forum shopping. In one instance, the Pennsylvania AG alleged that debt collectors took forum shopping a bit too far by setting up a fake courtroom (see video). Can the price of small debts be tied empirically to characteristics of local courts?