Every morning, Alaska’s court system publishes an updated list of new civil lawsuits filed across the state during the past week.
And every morning, that list is dominated by debt collection cases, newly filed by credit card companies, debt collection firms or businesses seeking repayment. On Tuesday, of the 115 listed cases, 84 were for debt collections.
In the first nine months of 2022, the court system saw 1,869 debt collection cases filed. Every year since then, the number has risen. Through the first nine months of this year, there were 3,447, almost double the figure filed in 2022.
“It’s pretty wild, the rise of them,” said attorney Stacey Stone, who practices in Alaska and is familiar with the issue.
Alaska isn’t alone in the upward trend — nationally, the number of collection lawsuits is rising after an ebb during the COVID-19 pandemic emergency.
January Advisors, a national data consulting firm that noted the rising trend in August, concluded that multiple factors may be driving it.
During the COVID-19 emergency, many Americans received financial aid that helped them pay down debt and build savings. Those programs have now ended, and American consumer debt is now at record highs, according to figures published by the Federal Reserve Bank of New York.
The number of people who are behind on their credit card payments is also on the rise, the Federal Reserve Bank of St. Louis reported earlier this year, and the number of car repossessions is rising.
Automated software programs also are making it easier for companies to more easily file large numbers of debt collection cases.
In June, the National Center on State Courts concluded that easier access to generative AI software is likely to increase filings in contract cases, like debt collections.
Typically, a credit card company or medical provider will try first to get payment on an overdue bill directly. But if a bill still goes unpaid, many companies will deem the debt uncollectable. At that point, they sell the rights to the debt to a collections company.
The sale means the company with the unpaid bill will get at least some money, and then it becomes the collections company’s job to try to recoup the debt and earn money for itself.
Court filings in Alaska and elsewhere indicate that debt collection companies are filing more cases in an attempt to collect on the unpaid debts they’ve bought.
Two researchers with Pew Research Center, in a September analysis, said that can have significant consequences for regular people.
People who are sued for consumer or medical debt rarely hire attorneys, they noted, and in many cases, people may not even be aware that they are being sued.
The Debt Collection Lab — a research group that includes Princeton University — found that in Oregon, private collection agencies filed the bulk of lawsuits on behalf of credit card companies, health care providers and utilities.
Only four percent of debt defendants responded to the cases filed against them, and as a result, Oregon courts awarded default judgments in favor of the debt collectors in almost seven of 10 debt cases filed between 2017 and 2023.
Data on the result of Alaska cases was not immediately available, but a preliminary examination of court dockets and filing patterns by the Alaska Beacon shows that the trends in Alaska are similar to those in other states.
A frequent filer in Alaska courts, a national debt-buying company called LVNV Funding, increased its filings by 350% in a handful of states between 2019 and 2024, January Advisors found.
In Connecticut, the top 10 most frequent filers in debt cases accounted for more than 80% of all debt cases filed in that state last year, January Advisors found, indicating that the most frequent filers are stepping up their aggressiveness.
“More people are defaulting on their debt right now because people are living paycheck to paycheck for various reasons, so I think you do have an organic process happening, but also there’s an aggressive process happening that’s uncharacteristic,” Stone said.
In Alaska, even a state representative has faced a debt-collection lawsuit whose details appear typical of the kinds of cases being filed here.
On Oct. 27, a debt collection firm known as Jefferson Capital Systems filed suit in Anchorage District Court against Rep. Jamie Allard, R-Eagle River.
According to the complaint, Allard took out a loan from Celtic Bank in 2023 and didn’t fully repay it. Celtic Bank subsequently transferred the debt — just $1,075 — to Jefferson Capital, which filed the lawsuit.
The attorney who filed the lawsuit didn’t respond to a request for comment.
Allard didn’t know about the suit until she was contacted by the Alaska Beacon, which was already writing this article.
“Oh my God; I had no idea what this was about,” she said.
Stone is Allard’s attorney and said cases like these seem to come out of left field. She said they tend to be filed in bulk, and as a result, they may be inaccurate, especially when a case is filed by a third-party firm that has purchased debt from another source.
Allard has an attorney; most Alaskans named as defendants in a debt-collection case don’t have that, according to a review of online court records.
Unlike in criminal cases, the state is not required to assign someone an attorney.
In most instances, that leaves the defendant to represent themselves or to seek help from a group like the Alaska Legal Services Corporation, a nonprofit that provides legal help to many Alaskans in civil lawsuits.
Maggie Humm, the corporation’s director, said it doesn’t have enough funding to take on every request for help that it receives, but it is seeing a surge in the number of requests for help on debt collection cases.
From 2022 through 2024, “there was a 61% increase in applications for all consumer protection matters,” which includes debt collections, said Humm.
Though the group hasn’t closed out this year, Humm said the number of people seeking help is about the same as last year.
If an Alaskan doesn’t respond to a debt collection lawsuit and a court issues a default judgment on behalf of a debt collection agency, a judge could order the garnishment of part of their income.
“Here in Alaska, we know that collectors file more cases because we have the Permanent Fund dividend … and they can garnish a percentage of it if they get a default judgment,” Humm said.
A court order also might allow a debt collector to go after someone’s checking account, other assets or — in the case of a member of the military — their military pay.
Humm said Alaskans who receive a legal complaint for debt collection should do their best to respond. She suggested they ask for help from the corporation, or get other help via online resources.
In September, the New York Times analyzed the surge of debt collection lawsuits and noted that part of the reason for the surge is that people don’t bother to defend themselves in court.
A court defense may make someone less attractive as a target, the Times found, and if more people defended themselves, debt collectors might begin seeing lawsuits as an unprofitable way to do business.