The Utah Bar Foundation has released a new report that suggests “systemic problems” in the way the state handles eviction and debt collection cases — which make up nearly a quarter of all civil cases in Utah district courts.
Among other findings, the study revealed sky-high interest rates for debtors, inequity in legal representation and billions of dollars in still unsatisfied judgments against debtors.
“This data suggests that there’s an inequity in the way the system is designed,” Christine Durham, co-chair of the Utah State Bar Access to Justice Commission, said during a media briefing Tuesday, in reference to a statistic showing how arbitrary judicial costs can be, “and that there are some systemic problems that the debtor cannot control.”
The foundation has already presented the study to the Utah State Courts and interested members of the Legislature, said Executive Director Kim Paulding, who is hopeful that the data will be of use in guiding future policy decisions.
Evictions
Some of the study’s most impactful findings dealt with eviction cases. The foundation considered data from 2013 to September 2021; during that time 59,668 eviction cases were heard in Utah’s district courts, which awarded $165 million in judgments against defendants from 2013-2020, according to the study. As of December, $143 million of that sum — or 86% — remained unsatisfied.
In these situations, landlords are stuck waiting for money that may never materialize, and evictees are left with bleak life prospects — potentially even after they satisfy their debt.
“That becomes a very serious problem when we talk about the shortage of housing in the state of Utah, and especially the severe lack of affordable housing,” Paulding said. “… In these tight rental markets, they [landlords] automatically deny renters who have an outstanding judgment.”
When asked by The Salt Lake Tribune about other consequences those with unsatisfied judgments may face, Paulding pointed to employment. Financial background checks are able to uncover outstanding debt, which can serve as a black mark against someone who is seeking work. Garnishment orders, too, can make it inconvenient to employ someone who has been evicted.
The state’s unique laws governing how such cases are handled also make overcoming eviction debt difficult.
Utah utilizes a system that offers a three-day notice to pay or vacate, after which mandatory treble (triple) damages can be assessed to a defendant.
Those damages are the primary reason the initial amounts in controversy in eviction cases are generally so much lower than the final judgments awarded to plaintiffs. In 2019, the median amount in controversy in Utah eviction cases was $640, six times less than the median judgment of $4,070.
This means being a few hundred dollars behind on rent can quickly become a thousands-dollar debt in the interim between case filing and judgment.
After judgment is handed down, it is then subject to a post-judgment interest rate, which had a median of 24% in a sample of 2019 cases. That is the percentage specified in the standard lease that many landlords in the state use, Paulding said.
The high interest rate is another reason why the evicted often end up paying several times what they owed in rent to reach satisfaction with plaintiffs.
The study also found a vast disparity in legal representation for plaintiffs and defendants in these cases. In 2019, only 3.3% of defendants in eviction cases were represented by a lawyer, while 88% of plaintiffs were represented by attorneys, according to the data.
“Having only one side represented by an attorney creates an imbalance in our justice system, which relies on adversary presentations, and often slows down the court process,” said Durham, who is also a former Utah Supreme Court chief justice. “As pro se litigants, meaning people representing themselves, are trying to navigate our somewhat complicated court system on their own.”
Payday lenders
Another significant finding was that nearly 85% of small debt claims heard in Justice Court were brought by companies, the majority of which were registered with the Utah Department of Financial Institutions.
“That means that they are some kind of lender here in the state of Utah,” Paulding said. “They might be a bank or a credit union, a credit card or a payday lender or some other type of high-interest lender.”
Numerous states have outlawed payday lenders due to “predatory” tactics, according to the Center for American Progress. However, they are still allowed in Utah and show up an inordinate amount in the state’s justice courts.
“The most frequent filers of debt cases in small claims come from just nine companies, all registered with the department as payday lenders,” Durham said.
Despite the study and its findings, Durham praised the judicial system’s work and transparency for providing the foundation with its case data and said it is always looking for ways to better fulfill its mission.
“I’m pleased to know that the Utah courts have also actively participated in the discussions with the recommendations on how to improve the system for all parties,” she said. “The courts believe that transparency is part of their job, and this is an example.”
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