In early March 2020, as Covid-19 spread across the country, Horst Seibert worked 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 pay was abruptly reduced by 25 percent. The culprit? A large debt collection company, San Diego-based Midland Credit Management, had begun garnishing his wages due to a $3,300 credit card balance he had not paid. Years earlier, Midland purchased Seibert’s debt from Citibank, which had written off the charge. Midland sued Seibert in Florida, won a trial and gained the legal right to deduct a portion of his profits
Seibert eventually reached an agreement with Midland for a payment plan. But after making on-time monthly payments of $49 for two years, Midland increased its total remaining balance by $194. After another year of punctual payments, they increased it again, reaching a total of $1,571, according to Seibert. Despite repeated inquiries over several months, Midland did not correct the apparent error or explain why it had inflated its bill, and 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 represents himself because he doesn’t have enough money for a lawyer. The company has since tried to have the case dismissed. Midland “does not acknowledge any irregularities other than, at most, an accounting error,” its attorney stated in a legal brief.
Midland is facing an avalanche of lawsuits from outraged consumers. Nearly every business day, a distressed debtor files a lawsuit against the company in federal court, alleging everything from incorrect information on their credit reports to a failure to contact a creditor. According to a lawsuit filed two months ago, Midland wrongly sued a Tennessee resident for $212, even though he had already paid his debt, and even though the company only filed the lawsuit in the Western District of Tennessee, which cost him $405. Midland is owned by debt-buying firm Encore Capital, led by Ashish Masih, a 60-year-old CEO and former McKinsey consultant with an MBA from Wharton.
Drowned in debt
A year ago, unpaid credit card debt hit its highest level since the financial crisis and has remained elevated ever since.
The recent cases against Midland are part of a broader pattern of growing consumer complaints against the thousands of companies that make up the $15 billion debt collection industry. In the past 11 months, consumers filed 253,000 complaints about collection companies with the Consumer Financial Protection Bureau (CFPB), up from 140,000 in the same period in 2024.
Complaints range from debt collectors failing to provide proof of debt to insisting on contacting “current and former employers, family, friends and even acquaintances.” The risk of abuse and strong-arm tactics is high: Nearly one in four Americans with a credit history has at least one debt in collection, according to the Urban Institute.
In emailed statements, Encore spokesperson Faryar Borhani said the company maintains a consumer bill of rights and suspends charging under certain circumstances, such as when people demonstrate significant financial hardship due to medical issues, if they are victims of a natural disaster or if their account is proven to be the result of identity theft. He added that Encore’s debt validation notices meet all regulatory requirements and that Midland agents only contact the creditor. He declined to comment specifically on active lawsuits.
Encore is a publicly traded company with $1.5 billion in annual revenue and a market value of $1.2 billion, and is one of the three largest debt recovery companies in the United States. Like its larger peers, it earns revenue by purchasing canceled debt, or loans that lenders, such as credit card issuers, write off after invoices have been declared uncollectible by the merchant or bank. Portfolio Recovery Associates (PRA Group), based in Norfolk, Virginia, is a publicly traded debt buyer and collector with $1.2 billion (in revenue). 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 raised 20% more money from consumers than it did a year ago and more than ever since its founding in 1953.
The main factor driving the business boom is that people are racking up more debt than ever—with $1.2 trillion in revolving credit card balances alone—and struggling to pay their bills. The amount of canceled credit card debt skyrocketed a year ago to $55 billion, a level not seen since the financial crisis. It remains elevated at $50 billion (see chart above).
Debt recovery companies, which sometimes call themselves “accounts receivable management companies” or “specialty finance,” typically engage in both debt purchasing and debt collection. The three largest file more than a million lawsuits a year against consumers to force them to pay, according to data science consulting firm January Advisors. And, since the Trump administration has drastically reduced financial regulation, there are fewer watchdogs to police bad practices.
The debt purchasing and collection business model is quite simple. Companies buy long-standing 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). They then try to collect repayment from as many debtors as possible. Debt buyers typically receive a spreadsheet with consumers’ names and supporting documentation about what they owe, and then proceed to pressure debtors via mail, email, phone calls and text messages. Unpaid debts typically end up on consumers’ credit reports, lowering their credit scores. Debt collectors end up collecting 20 to 25 cents on the dollar on average, and are willing to go to court to collect
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: “Collection litigation is a last resort at our company, and we would prefer it never come to that.” Resurgent Capital will likely file more than a million consumer debt lawsuits this year. (Resurgent Capital did not respond to several emails seeking comment.)
Debt collectors 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 these small awards are attractive to collectors: the price is not too high for even financially challenged people to pay, and it probably won’t bankrupt them, in which case collectors get nothing. Lawsuits are also effective because they alert consumers. Receiving a judgment for a $700 overdue medical bill, for example, is often on your permanent credit history.
Another reason debt collectors sue for such small sums is because they have automated the legal process and found ways to keep costs down. They use filing templates, task their attorneys with handling large caseloads, and outsource the work to outside law firms. For example, in 2024, London & London filed 7,720 debt collection lawsuits against consumers on behalf of Midland in Connecticut alone, representing 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, in part because more than one attorney may work on a case.
According to Pew, more than 90% of consumers do not show up to court when they are sued by debt collectors. Many don’t know the name of the debt collection company and think the notifications are a scam, or ignore them in the hope that the problem will go away. But when consumers don’t show up, the debt collector obtains a default judgment against them, often giving them the legal right (depending on the state) to garnish your wages or bank account.
During the Biden administration, debt collectors came under the CFPB’s regulatory spotlight, and the agency took numerous legal actions against companies for illegal debt collection practices, especially for medical and student loan debt. Debt purchasing and collection giant PRA Group found itself in trouble in March 2023, when the CFPB ordered the company to provide $12 million to consumers and pay a $12 million fine for several alleged violations, including filing lawsuits against consumers without having required documentation about unpaid loans. At the time, PRA did not admit wrongdoing and said it disagreed with the CFPB’s claims.
In the first 11 months of 2025, the PRA has responded less frequently to consumer complaints filed with the CFPB. According to the agency’s public database, it has failed to respond timely to 611 complaints, representing about 4.3% of total complaints received, compared with just 0.7% during the same period in 2024. A PRA spokesperson declined to comment.
Credit Collection Services (CCS), a Norwood, Massachusetts-based debt collection agency whose website has the motto “where the cash flows,” has failed to provide timely responses to 2,870 complaints this year, or 40.4% of all complaints, representing a dramatic increase compared to an untimely response rate of 20.8% during the same period in 2024. (CCS executives did not respond to our requests for comment.) In 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.
However, in August 2025, despite the increase in debt collector activity, CFPB Acting Director Russell Vought issued a public request for information regarding the possibility of reducing the number of debt collection companies under his supervision from between 200 and 250 to just 11. Such a change could mean that only 18% of debt collection activity (in terms of revenue) would fall under the regulator’s jurisdiction. federal. Vought cited concerns about unnecessary compliance burdens on debt collectors and inefficient use of the Bureau’s limited resources as reasons for the proposed changes.
Fewer police officers on patrol will only embolden debt collectors, and the situation will likely get worse for consumers. April Kuehnhoff, senior attorney at the nonprofit consumer advocacy organization National Consumer Law Center (NCLC), says, “With cuts to Medicaid and health plan subsidies, today’s cuts are tomorrow’s debt.”
This article was originally published by Forbes US.
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