With federal oversight in retreat, deep-pocketed collection companies are aggressively pursuing down-and-out consumers who are struggling with record levels of credit card debt. Meanwhile, consumer complaints go unanswered.
IN early March 2020, as Covid-19 swept across the nation, Horst Seibert was working at a South Florida assisted-living facility as a driver for its elderly residents. He earned just $12.88 an hour and was shocked when his paycheck was abruptly slashed by 25%. The culprit? A big debt collection company, San Diego-based Midland Credit Management, had begun garnishing his wages due to a $3,300 credit card balance he had neglected to pay. Years earlier, Midland purchased Seibert’s debt from Citibank, which had written off the charge. Midland sued Seibert in Florida, won a judgement and gained the legal right to deduct a portion of his earnings.
Seibert eventually struck a deal with Midland to go on a payment plan. But after making on-time monthly payments of $49 for two years, Midland increased his total remaining balance by $194 without explaining why. After another year of on-time payments, they increased it yet again, eventually raising his balance by a total of $1,571, according to Seibert. Despite repeated inquiries over several months, Midland failed to fix the apparent error or explain why it ever inflated his bill, and it stopped responding to Seibert’s questions.
“I felt helpless,” Seibert says today. “How am I going to correct this if these people don’t respond?” In October, he filed a lawsuit against Midland. He’s representing himself because he doesn’t have enough money for an attorney. The company has since tried to get the case dismissed. Midland “does not concede any wrongdoing, other than at most an accounting mistake,” its lawyer said in a legal filing.
Midland is facing a barrage of lawsuits from angry consumers. Nearly every working day, some distressed debtor files a case against the company in a federal court, claiming everything from inaccurate information placed in credit reports to a failure to stop contacting a debtholder. According to a lawsuit filed two months ago, Midland mistakenly sued a Tennessee resident for $212 even though he had already paid his debt–and even though it cost the company $405 just to file the lawsuit in the Western District of Tennessee. Midland is owned by debt buyer Encore Capital, which is led by 60-year-old CEO Ashish Masih, a former McKinsey consultant with a Wharton MBA.
The recent cases against Midland are part of a larger pattern of rising consumer complaints against the thousands of businesses that make up the $15 billion debt-collection industry. Over the past 11 months, consumers filed 253,000 complaints about collection companies to the Consumer Financial Protection Bureau (CFPB), up from 140,000 during the same period in 2024.
The complaints range from collectors failing to provide proof that a debt was owed to aggressively contacting “current and previous employers, relatives, friends, even acquaintances.” The potential for heavy-handed tactics and abuse is large–nearly one in four Americans with a credit report has at least one debt in collections, according to the Urban Institute.
In emailed statements, Encore spokesperson Faryar Borhani said the company maintains a consumer bill of rights and ceases collection in certain circumstances, such as when people demonstrate they’re under significant financial hardship due to medical issues, if they’re victims of a natural disaster or if their account is proven to be the result of identity theft. He said Encore’s debt-validation notices meet all regulatory requirements and that Midland’s agents only contact the debt holder. He declined to comment specifically on any active lawsuits.
Encore is a publicly traded company with $1.5 billion in annual revenues and a $1.2 billion market value, and it’s one of the three largest debt recovery companies in the United States. Like its biggest peers, it makes money by buying charged-off debt, or loans that lenders like credit card issuers write off after bills have been deemed uncollectible by the merchant or bank. Norfolk, Virginia-based Portfolio Recovery Associates (PRA Group) is a $1.2 billion (revenue) publicly-traded debt buyer and collector. A third is Resurgent Capital Services, which was once owned by billionaire Ben Navarro’s Sherman Financial Group. In the third quarter of 2025, Encore collected 20% more money from consumers than it did a year ago and more than it ever has since its 1953 founding.
The major factor driving its boom in business is that people are holding more debt than ever–with $1.2 trillion in revolving credit card balances alone–and they’re having trouble paying their bills. The amount of charged-off credit card debt spiked a year ago to $55 billion, a level that hadn’t been seen since the Financial Crisis. It remains elevated at $50 billion (see chart above).
Debt recovery firms, which sometimes call themselves “receivables management” or “specialty finance” companies, often engage in both debt purchases and collections. The three largest are filing more than one million lawsuits a year against consumers to get them to pay up, according to data science consulting firm January Advisors. And as the Trump Administration has dramatically rolled back financial regulation, there are fewer watchdogs around to police bad behavior.
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The debt-buying and collections business model is pretty simple. Companies purchase long-outstanding invoices or debts that entities ranging from banks to hospitals have essentially written off. These debts typically sell for as little as 10 or 15 cents on the dollar (as a percentage of the outstanding balance). Then they attempt to collect repayment from as many debtors as possible. Debt buyers typically receive a spreadsheet of consumers’ names and supporting documentation about what they owe, and then they proceed to prod debtors via mail, email, phone calls and text messages. The unpaid debts normally wind up on consumers’ credit reports, dragging down their credit scores. Debt collectors end up collecting 20 to 25 cents on the dollar on average, and they are willing to go to court to get paid.
Midland alone will likely file more than 600,000 lawsuits against consumers in 2025, according to January Advisors, up from about 300,000 in 2022. Encore spokesperson Borhani told Forbes in a statement, “Collection litigation is a last resort at our company, and we’d prefer it never come to that.” Resurgent Capital will probably file more than one million consumer debt lawsuits this year. (Resurgent Capital didn’t respond to multiple emails requesting their comments.)
Debt collectors will often sue consumers for as little as $800, says Bill Kaludis, a Nashville plaintiffs’ attorney who often represents consumers who sue and are sued by debt collectors. One reason such small prizes are appealing to collectors: the price tag isn’t too high for even cash-strapped people to pay, and it likely won’t drive them into bankruptcy, in which case the collectors get nothing. Lawsuits are also effective because they set off alarm bells for consumers. Getting hit with a judgment over a $700 overdue medical bill, for example, often stays on your permanent record.
Another reason why debt collectors sue for such tiny sums is because they’ve automated the legal process and found ways to keep costs low. They use templated lawsuit filings, have their attorneys handle huge caseloads and outsource work to outside law firms. For instance, in 2024, London & London filed 7,720 debt-collection lawsuits against consumers on Midland’s behalf in Connecticut alone, or an average of 29 lawsuits per business day, according to January Advisors. Borhani says dividing the number of lawsuits by business days can create an inaccurate picture, partly because more than one attorney can work on a case.
According to Pew, more than 90% of consumers don’t show up in court when they get sued by collectors. Many don’t recognize the debt collection company’s name and think the notices are a scam, or they ignore them, hoping the issue will disappear. But when consumers don’t show, the debt collector gets a default judgment against them, which often gives them the legal right (depending on the state) to garnish their wages or bank account.
During the Biden Administration, debt collectors were under the CFPB’s regulatory microscope, with the agency bringing many enforcement actions against companies for illegal debt collection practices, especially for medical and student-loan debt. Debt-buying and collections giant PRA Group found itself in hot water in March 2023, when the CFPB ordered the company to give $12 million to consumers and pay a $12 million fine for several alleged violations, including filing lawsuits against consumers without having required documentation about the unpaid loans. At the time, PRA didn’t admit wrongdoing and said it disagreed with the CFPB’s claims.
In the first 11 months of 2025, PRA has been responding less often to consumers’ complaints filed to the CFPB. According to the agency’s publicly available database, it hasn’t provided a timely response to 611 complaints, or about 4.3% of all complaints it received, up from just 0.7% over the same period in 2024. A PRA spokesperson declined to comment.
Norwood, Massachusetts-based debt collector Credit Collection Services (CCS), whose website sports the tagline “where cash flows,” hasn’t provided timely responses to 2,870 complaints this year, or 40.4% of all complaints, up dramatically from an untimely response rate of 20.8% over the same period in 2024. (CCS executives didn’t respond to our requests for comment.) By contrast, Midland and Resurgent Capital’s timely response rate has been nearly perfect, with less than 0.1% of CFPB complaints not receiving timely responses.
Yet in August 2025, despite the ramp-up in debt collectors’ activity, acting CFPB director Russell Vought issued a public request for information on whether to reduce the number of debt collection-companies under its supervision from between 200 and 250 to as low as 11. Such a change could mean only 18% of debt collection activity (by revenue) would fall under the federal regulator’s purview. Vought cited concerns about unnecessary compliance burdens on debt collectors and inefficient use of “limited Bureau resources” as reasons for the proposed changes.
Fewer cops on the beat will only embolden debt collectors, and things are likely to get worse for consumers. Says April Kuehnhoff, a senior attorney at the nonprofit consumer advocacy group the National Consumer Law Center (NCLC), “With the cuts to Medicaid and to subsidies for health care plans, cuts today are debts tomorrow.”
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