Recession hits creditors, clerks at Boone County Courthouse

Thursday, July 9, 2009 | 12:01 a.m. CDT; updated 9:25 a.m. CDT, Thursday, July 9, 2009
The number of cases on Circuit Judge Gene Hamilton's docket filled nearly 13 pages outside his courtroom at the Boone County Courthouse on July 6.

COLUMBIA — Three years ago, 2,667 breach of contract and other kinds of consumer debt cases were filed in Boone County. Most were for things such as delinquent debts and rent. In 2008, that number leapt to 4,005, a 50 percent increase. Already this year, 2,042 more such cases have been filed.

Each of those cases began with a single piece of paper that said that someone couldn't pay someone else, and that single piece of paper begat more paper and more paper until it became part of an avalanche of reams of paper from thousands of cases in court each year that create a mountain of filings and paperwork and harried clerks with more to do than they can handle.

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Most legal assistance in the area is focused on family law rather than contract-related matters, but local legal aid organizations may make some exceptions.

If you earn below 125 percent of the federal poverty line and live within one of 11 mid-Missouri counties (including Boone, Callaway and Cole counties), call Mid-Missouri Legal Services at 442-0116.

If you earn between 125 percent and 150 percent of the poverty line and live in Boone or Callaway counties, call Mid-Missouri Access to Justice coordinator Negar Jackson at 474-2292. Right now, Access to Justice is accepting only domestic violence and domestic relations cases.

If you do not fit in any of the above categories, consider contacting a local attorney. Many provide free consultations, and you may find it to be in your interests to pay to retain an attorney. Search for nearby lawyers with a variety of specializations at the Missouri Bar's Web site.

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As for solutions, there's some thin hope that things will get better. For now, there are lots and lots of human beings with serious financial troubles, the people and companies to whom they owe money and the litigators, clerks, judges and court administrators keeping track of all their stories.

One of those stories belongs to Nancy Jones.

In 2003, Jones had just split up with her husband. Forced to file for bankruptcy protection, she felt adrift and vulnerable, and, she said, it was almost as if Capital One knew it. They offered her a credit card with a $500 limit. Her credit was "in the dumpster" and her personal life didn't feel much better, so she went for it.

"I never thought that I would abuse (the card)," she said. "I kept up with it real good until things starting going all to pieces."

A social worker with a steady paycheck, Jones was a model borrower, she said. So her credit limit rose steadily.

Jones, now 61, suffers from severe fibromyalgia and post-polio with osteoarthritis and has applied for disability benefits. Her health issues forced her to work fewer hours, and on Jan. 3, 2007, Jones lost her job. She still remembers the date.

"My circumstances changed and that was it," Jones said. Her debt, boosted by regular late fees and 25 percent interest rates, began to spiral out of control. "I had a $1,500 credit limit. When I hit $1,300, I knew ..." her voice trailed off as she remembered realizing she was on the edge of financial oblivion.

Jones said she was willing to repay her bills steadily out of her Social Security checks, but Capital One refused to work with her. Capital One representative Pam Girardo, who said she was not able to speak to Jones' specific case, said Capital One strives to cooperate with customers and offers a variety of options to those under financial duress. Legal action is used as the last resort, Girardo said.

On Feb. 18, a St. Louis attorney and debt collector hired by Capital One filed a petition against Jones asking for $2,300 plus attorney and court fees. On Feb. 24, Jones appeared in court. She was given one month to work something out.

Jones said she pleaded with representatives of the law firm.

"Give me a chance. I don't want to be a deadbeat, I want to pay you," she recalled saying. "They just didn't care."

Then, she said, the threats started.

"You've got a house," she recalls a representative saying. "We're going to take your house. We don't care."

Her gentle voice rose with contained fury when she recalled the incident. Jones has almost paid off the mortgage on her modest home north of Columbia and won't let it go without a fight.

Understaffed, overworked

Boone County Circuit Clerk Christy Blakemore said consumer debt cases — such as Jones' case — are a direct result of the economic downturn. People are having a tougher time paying the bills, and, as money gets tight, businesses are being forced to pursue delinquent debtors more aggressively.

Blakemore and her staff are struggling to keep up with the filings, mailings, re-filings, scheduling, filing maintenance and the myriad behind-the-scenes tasks that keep the judicial system running.

The same economic difficulties that have ratcheted up their workload have conspired to reduce the number of employees the already-understaffed office has to deal with the deluge, making an already-difficult situation even trickier, Blakemore said.

According to the state's 2008 weighted workload study, in which detailed journals of day-to-day activities filled out by selected counties are used to calculate how many employees will be needed by each circuit statewide, the 13th Circuit Court needs 52 full-time employees. At the time, it had 42, making the local office the 12th-most overworked of the state's 115 counties and administrative regions.

Since that survey, the circuit has lost an employee that it's been unable to replace, thanks to a just-lifted state judicial hiring freeze. Another left the day before the freeze lifted. Meanwhile, case numbers have climbed rapidly.

"This is bad, not having enough people to do your work," said Blakemore, who started with the office in 1989 and was elected to the top spot in 2007. "But it doesn't help when your filings keep going up."

The clerks handle just about every case that comes through the courthouse, from consumer debt cases such as Jones' to landlord-tenant cases and probate work to driving-under-the-influence cases and major criminal trials. And they handle each repeatedly.

On the face of it, Jones' case seemed simple enough: She owed money, her creditors filed a lawsuit, and she showed up in court three times to dispute it.

Behind the scenes, each of those steps — and a few that didn't make the list — required filings, computer entries and heaps of paperwork.

In Jones' case, the entire process, from summons to court appearance, was repeated two more times.

If her case had gone to trial and the judge had ordered her to repay the debt, the plaintiff's attorneys would have filed a garnishment. It allows the plaintiff to pull money from the defendant's wages or bank account to satisfy the debt. That, of course, would entail another long, labor-intensive process.

In 2007, the clerk's office had to file 3,837 garnishments. In 2008, the number had climbed to 4,680, a 22 percent increase. Another 2,333 have hit the books this year. If the pace continues, 2009 will match and possibly exceed 2008's total.

When a creditor wins a case, its attorneys are then responsible for figuring out the debtor's banking or employment information and filing a garnishment to recover the money.

For each garnishment, clerks have to send out interrogatory documents in a process similar to a summons, process and distribute payments and repeat the process as many times as necessary to satisfy the debt in question.

Recession cases clog courts

Boonville lawyer Ken Askren, with his massive but meticulous moustache, is a familiar sight in the Boone County Courthouse. Askren represents out-of-town law firms in local courtrooms for cases such as Jones'. In fact, court records show his firm squared off against Jones in a few of her appearances.

Askren is busy these days.

"I don't think there's any question that there's a huge number of cases being filed not only here but statewide regarding consumer debt," Askren said.

Only a tiny percentage of such cases go to trial, he said. But with many defendants returning to the courtroom multiple times for each case, "it takes up a lot of appearance time.

"From a clerk's standpoint, that's a lot of papers to shuffle," he said.

Mid-Missouri Legal Services, an organization that gives needy clients free advice and representation and that is funded by federal, state and local governments, has also been caught in the tidal wave.

"Our caseload's shot up since the economy went belly-up," said Susan Lutton, executive director of Mid-Missouri Legal Services, in a previous Missourian story about a new legal aid program. "A lot more people are qualifying for our services because they've been laid off. The number of poor people has greatly increased. You have more clients, but you don't have more money to serve those clients."

One of the cruel ironies of the cases now clogging the circuit courts is that most defendants, who are, after all, usually in court because they can't afford to pay back their debt, find it impossible to afford a lawyer.

The state doesn't provide attorneys in civil cases like these; public defenders are reserved for criminal cases.

"Most do not have attorneys," Askren said. "Probably 1 out of 100 has an attorney who's going to defend on the matter."

A typical scene played out on the afternoon of July 2 in Judge Leslie Schneider's courtroom. Discover Bank had taken Karrie McKenna to court for alleged unpaid consumer debt. The lawyer representing Discover told Schneider that McKenna "didn't respond in a timely fashion to the request for discovery," a standard fact-finding step in most litigation.

McKenna replied that she'd "lost the papers," so she hadn't been able to send them on time.

Schneider, her voice showing the strain of walking the thin line of judicial impartiality in the face of the stream of humanity flowing through her courtroom, reminded McKenna that "there are rules on how (she's) supposed to do this."

"I don't have anything in the court file that shows to me that you responded to those interrogatories or those requests," Schneider said.

McKenna's figure, dwarfed by the wooden facade of the judicial bench, slumped in frustration. She mumbled an answer.

"My biggest problem is I don't have the money to retain a lawyer," she said.

McKenna's helpless exasperation is practically routine in such court sessions.

Outside of her courtroom, Schneider said that while she can't give legal advice, "it would be great if there were some sort of education program" to teach the basics to people who can't afford to retain an attorney.

"It's very difficult for them to get legal help," Schneider said. "They just don't understand the process."

Schneider said even limited representation or consultation would be a major improvement.

Jones and a few others like her have found that even a little legal advice can make a massive difference.

She attributes her success in court to the fact that she at least knew enough to call an attorney for a free consultation. "He told me what was going to happen and what I had to do," Jones said.

Faced with either scraping together $500 for an attorney or going without representation, Jones said the decision was easy.

"I said, 'I think I'm smart enough to do it myself.' So I did," she said.

Jones said that though she had issues with debt collectors and Capital One, she didn't have any problems with the court system.

"I knew enough that I knew I had to abide by their rules," Jones said. "They're not trying to pick on you; that's just the law."

Carl Thomas Powell, a 75-year-old retired auto body worker, didn't have much experience with the legal system and, if it weren't for Mid-Missouri Legal Services, his son said Powell "would have been in quite a mess."

When his wife died more than a decade ago, Powell was stuck with about $2,000 in credit card debt he hadn't even known she'd had, son Carl Edward Powell said.

"For about seven or eight years, my dad kept making payments to the credit card company — $100 to $125 a month. Over that whole period of time, it didn't seem like the balance diminished any at all," Carl Edward Powell said. "He finally stopped making the payments after about eight years."

The debt was passed around from bank to bank and collection agency to collection agency, Carl Edward Powell said.

On March 31, 2008, one of those agencies took him to court over the debt.

Attorney Michael McCrary of the Debt Relief Law Center of Missouri said debt collectors pick up such debt for just a few cents on the dollar and make a "darn good profit," if they can get 1 out of every 5 or 10 consumers to pay up.

"The business model for the debt collectors is for the consumer to ignore (the case), be scared by it and let it go to default judgment," McCrary said. "That's how the debt collector makes the most profit."

"My dad couldn't afford an attorney, really," Carl Edward Powell said. "He was served with papers for his suit, and they were seeking over $9,000. It put my dad in a situation where he was going to have to file bankruptcy or fight it."

Legal Services, which helps people earning no more than 125 percent of the federal poverty line — for a single man like Powell that would mean an annual income of under $13,000 — came to the rescue.

At first, the crew at Legal Services just advised Carl Thomas Powell, but they soon stepped up to represent him in court. There, they demanded a copy of the original credit card application from the plaintiff. When the collection agency couldn't provide any such proof, the case was dismissed.

Carl Edward Powell called Legal Services a "godsend."

"For people, especially elderly people like my dad who don't have a lot of knowledge of what's going on in these types of affairs (and who have) a limited income, (the creditor) could easily have got a judgment against him without legal aid's help," Carl Edward Powell said. "He'd have been in all kinds of trouble."

Judges, lawyers and community members have found the need for legal aid to be so severe that they've joined forces to launch a community-supported program to serve those who don't qualify for help from Legal Services. Mid-Missouri Access to Justice, a program that provides free legal services to needy Boone and Callaway county residents who can't get help anywhere else, is already accepting applications and will formally launch this month.

Looking for relief

The Boone County Circuit Clerk's office is taking the first small steps toward easing its workload. The state judiciary's hiring freeze ended July 1, and Blakemore is now interviewing to fill two positions, one of which has been vacant for more than five months. The office still won't be anywhere near where the state workflow report says it should be, but at least it won't be quite as far behind.

Blakemore plans to move one of the new employees to accounting, the department that handles garnishments, because work there is piling up as never before.

"I'm going to try to get my two positions filled as quickly as possible before they change their mind and hope we don't have anymore leave," Blakemore said.

The next big changes to the clerks' daily routine will arrive Aug. 28 when two new laws will take effect — one helpful, the other not.

First, the good news. After years of lobbying, Missouri clerks persuaded the legislature this session to free them from the requirement to deliver default judgments for rent and possession cases by certified mail.

It doesn't sound like much, but to Blakemore and her employees, it's the long-awaited demise of a major annoyance.

Default judgments are those delivered against defendants who don't bother to show up in court. Rent and possession cases are those filed by landlords seeking to recover unpaid rent and regain possession of their apartments. It's the final step before eviction.

The majority of the letters come back undelivered, Blakemore said. This, of course, creates still more work as the unopened letters have to be filed and the computer system has to be updated once more.

"Little things like that take so much time," Blakemore said. "(The rule changes) will be a very very big help to us."

But, Blakemore said, while the legislature took one small step forward, it's taking another step back. A new requirement to redact Social Security numbers from divorce files before anyone is allowed to look at them will turn a routine daily task into a time-consuming hassle, she said.

"That's going to hurt us timewise," Blakemore said.

At the same time, Blakemore and other circuit clerks across the state are putting their workflow under the microscope, looking to cut back on anything that's not absolutely required by state statute, court rules or other official regulations.

Looking at the big picture, Blakemore said her employees are "keeping up so far" with the avalanche of work. But they're forced to perform a sort of file-folder triage, and many things don't get done as quickly as clerks, judges and litigants might like.

"There are times when we just get swamped because there is such a wide variety in what we handle here," Blakemore said.

The slowdowns probably add to the frustration felt by people caught up in messy litigation, Blakemore said. "The average citizen filing small claims doesn't know that person handles more stuff" than just the citizen's type of case, she said.

When all is said and done, the purpose of the clerk's office is to be the record of the court, Blakemore said. But as day-to-day concerns eat up more of her office's time, the long-term archives are suffering.

"I don't even want to tell you how many files we have that need to be microfilmed," Blakemore said.

"It's tough to keep people upbeat and keep morale going when they see the numbers, they see the files, and they see no relief in the future," Blakemore said.

Spoiler alert: happy ending ahead

As for Jones, she was back in court on March 24. Representing herself, Jones formally disputed the charge.

"I wasn't going to just roll over," she said. She told Capital One's representative, "I owe you $1,300 for sure, but I don't owe you $2,300," referring to the interest and late charges that had been added to the balance she owed.

On July 2, she returned to court and prepared to go to trial. Behind the bench sat Schneider, the same stern, efficient woman who, as a private attorney many years before, had helped Jones adopt her son, Derrick, now 17.

It must have been a good omen.

When the plaintiff's attorney stopped by before the hearing and told Jones he would ask for the case to be dropped, relief and gratitude poured across Jones' features.

Jones still doesn't know why it was dismissed — she suspects Capital One wasn't willing to go through the hassle of taking on a defendant who was willing to fight the charges. She knows the company may re-file in the future to collect what she owes then. But for now, she thankful for the reprieve.

For now, she'll keep her house.

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Alessandro Machi July 9, 2009 | 9:42 a.m.

The Associated Press just did a story that the states that allow wages to be garnished by credit card companies have a MUCH HIGHER RATE OF BANKRUPTCY than states that do not allow credit card companies to garnish wages.

The much higher rate of Bankruptcy in garnishing states results in more people asking for financial assistance from their state government. Bankrupt citizens caused by the garnishing of wages cause local economies suffer, which results in less tax revenue for the state.

The state tries to raise taxes, drawing the ire of the states citizens and small business. Tea party protests spring up which result in attention being diverted away from the real agitator in this situation, the credit card companies and their idiotic methods.

Credit card companies are actually destroying the economy when they could be helping by offering INCENTIVES to people to pay down their debts rather than finding any excuse to punish them.

(Report Comment)
John Schultz July 9, 2009 | 10:02 a.m.

Perhaps if people were more responsible with their credit card spending and studied more the offers they received, less people would be in such a situation. Personal responsibility, think about it.

(Report Comment)

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