How a tech startup is helping people who are facing debt collection lawsuits

PHOENIX — One in four American adults have a debt turned over to private collectors, according to research from the Debt Collection Lab. 

Nationwide, researchers estimate major collection agencies file millions of lawsuits every year. 

For those who get sued, the prospects are bleak.  

>> Download the 12News app for the latest local breaking news straight to your phone.

Debt collection lawsuits typically demand less than $10,000, and some estimates suggest the majority of debt collection lawsuits demand less than $5,000. 

That amount can devastate a person or family who is already strapped for cash, but it’s typically too small an amount to hire an attorney. 

RELATED: While they were penalized in other states, this debt collector continued filing thousands of lawsuits in Arizona

“I can’t afford a lawyer…how much is an attorney going to cost? Maybe just as much (as the debt), and they count on that,” said Anne Munoz. 

Munoz lives in northern Arizona and was sued over a debt she said she did not owe. She challenged her case without an attorney, and a judge ultimately ruled in her favor, tossing the case. 

“It’s so time consuming, I mean, I got the summons September 17, and from that day until just maybe a week ago, I have spent a minimum of five hours a day on my phone having to do research,” Munoz said in an interview with the I-Team in December. 

“This has cost me money,” Munoz said. “I wasn’t prepared to have to buy a printer, buy paper, buy ink, buy Microsoft, buy all these things, and they stole my personal time.” 

Most consumers who get served a lawsuit simply don’t respond. That can lead to a default judgment against the consumer; an automatic win for the debt collector. 

“Our best estimate around the country is somewhere between 60 and 70% of all of these lawsuits end in a default judgment,” said Lester Bird, Principal Associate for the Civil Legal System Modernization team at the Pew Charitable Trusts. “Typically that’s an automatic win with no judicial review of the case or of validity of the case.”

RELATED: Debt lawsuits trap millions in legal limbo as companies cash in

“The number one pitfall is not responding,” said George Simons, founder of Solo, a technology company that makes it easy for individuals to file answers to a lawsuit or negotiate a settlement.

“If somebody gets sued, a lot of times, they won’t respond,” Simons said. “We’re changing that. We’re making it very easy for people to respond and engage with the collector.” 

Simons said he was inspired to start the tech company when he was in law school and found for himself how hard it could be to find a lawyer. 

“In my first year of law school, I bought a car that turned out to be a lemon,” Simons said. “It died on me just three days after buying the car, and I tried getting an attorney to help me out with my case, but I couldn’t find a lawyer to take my case.” 

“And I thought, ‘If I’m in a building full of lawyers and I can’t find one to take my case, who else out there can’t find the lawyer to hire?’ And it turns out, lots of people.” 

He said that inspired him to build a business that would help consumers navigate the legal system and remove some of the challenges. 

“I found out that the biggest category of lawsuits in the U.S. are for debt collection, and most of those cases, pretty much never does the lawyer take on the defendant’s case,” Simons said. “So we made SoloSuit at that time to make it easy for people in Utah to respond to these debt lawsuits.” 

Eventually, SoloSuit became Solo and expanded across the country. 

“To date, people have brought $1.5 billion in debt lawsuits onto our platform to get those resolved,” Simons said. 

Solo offers options to file an answer to a lawsuit, but it also allows consumers to respond to a notice from a law firm, even before a lawsuit is filed. 

Solo works with collection agencies to negotiate settlements and avoid litigation altogether. 

These options can help consumers save money on court fees and save time. 

“The core realization for us is that the consumer and the collector really want the same thing most of the time, which is to settle the debt at the ideal rate as fast as possible,” Simons said.    

So far, according to company data, SoloSettle has handled nearly 500 cases in Arizona. The company said that the average lawsuit for their customers in Arizona was about $7,600, but they settled for $2,500 on average. 

If you get served a lawsuit from any debt collector, take it seriously. 

Be aware of deadlines to respond to a lawsuit if you dispute the claims against you. If you fail to respond or appear in court, the debt collector can move forward with asking for a default judgment. 

Community Legal Services offers free services to people who qualify. 

You can apply by phone by calling 602-258-3434 between the hours of 9 a.m. and 2 p.m. Currently, CLS does not accept walk-ins.  

You can also find help online 24 hours a day at AZLawHelp.org. 

If you do not qualify for free legal aid, consider the “Modest Means Project,” which offers low-cost attorney consultations at $75 per hour. You can all MMP at 866-637-5341. 

For more legal resources, check AZ Law Help.  

To learn more about how to respond to a debt collector or whether your rights may be violated, the Consumer Financial Protection Bureau provides information and resources.  

If you have tips on this or any other story, you can contact the reporter Katie Wilcox at [email protected] or email the newsroom at [email protected]  

>> Download the 12News app for the latest local breaking news straight to your phone.

You can now watch 12News content anytime, anywhere thanks to the 12News+ app!

The free 12News+ app from 12News lets users stream live events — including daily newscasts like “Today in AZ” and “12 News” and our daily lifestyle program, “Arizona Midday”—on Roku and Amazon Fire TV.

12News+ showcases live video throughout the day for breaking news, local news, weather and even an occasional moment of Zen showcasing breathtaking sights from across Arizona.

Users can also watch on-demand videos of top stories, local politics, I-Team investigations, Arizona-specific features and vintage videos from the 12News archives.

Roku: Add the channel from the Roku store or by searching for “12 News KPNX.”

Amazon Fire TV: Search for “12 News KPNX” to find the free 12News+ app to add to your account, or have the 12News+ app delivered directly to your Amazon Fire TV through Amazon.com or the Amazon app.

Catch up on the latest news and stories on the 12News YouTube channel. Subscribe today.