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.Debtor’s Purgatory

People who can't afford to hire an attorney have virtually no chance in court against well-heeled lawyers for banks and debt collection companies.

Felipa Martinez is a petite woman to begin with, but standing beneath the dais in Contra Costa Superior Court she looked even tinier. Martinez had arrived with her adult daughter in tow, partly for visual assistance (a degenerative eye condition has left her unable to take the bus by herself), partly for translation (she speaks just enough English to get by), and partly for emotional support. The daughter grasped Martinez’ shoulder while Judge Steven K. Austin rifled through a stack of old bank statements and receipts. A stylish, high-heeled attorney sat at the plaintiff’s stand, prepared to wrangle every cent of the $1,000 debt that Martinez owed Chase Bank a few years ago, which had gone into collections and ballooned to $2,100. Martinez stared at the judge as a tear pooled in the corner of her eye. She knew the deck was stacked against her.

Martinez’ case was one of roughly a dozen that Austin would hear on a recent Monday morning, many bearing similar narrative contours: Martinez had lost her job as a dental assistant five years ago. She began racking up credit card bills from Washington Mutual, and saw a precipitous rise in her lender’s interest rate after Washington Mutual was acquired by Chase. Around the same time, she started experiencing health problems: first colon cancer, which she managed to stave off, then the eye problem, then a series of expensive root canals. She lost her health insurance, then her home in Antioch, and had to move in with her daughter in Union City. (They later resettled in Stockton.) She lost her ability to pay for small things like new clothes and cross-county BART rides. The $12 round-trip fare to visit a free law clinic at the Concord Library was suddenly a major hardship.

Martinez is just one of many people who stream through Austin’s courtroom each day without a lawyer to represent them because they can’t afford one. And these self-representing litigants — called propria persona, or pro per, in the legal world — typically find themselves at a severe disadvantage. That Monday, Austin fielded another debt collection case with a defendant who telephoned in from her home in San Diego, not sure how to change the hearing venue or even respond to papers after she’d been served. He scheduled a non-jury trial for a hospital administrative manager who arrived in scrubs, asking him to forgive the several-thousand-dollar debt she owed Citibank — the bank had demanded $279 monthly late fees for a year and a half after she’d closed the account, tacking an additional $3,000 onto a $1,582 principal. Austin sees people who have drained their bank accounts on payday loans, seen their mortgages go under water, gotten hoodwinked by a subprime lender or swindled by a family member, lost their jobs, lost their health insurance, watched their marriages disintegrate.

“I see a lot of people in this same situation,” Austin said to Martinez, deploying a phrase he used repeatedly throughout the day, in the empathic tone of a parent pouring rubbing alcohol on a wound. “Have you considered filing for bankruptcy?”

The steady uptick in pro per litigation has long bedeviled California courts. In 2007, the Administrative Office of the Courts reported to the state legislature that there had been a “dramatic increase” from the 4.3 million defendants who represented themselves in 2004. And according to interviews with judges, lawyers, and court officials for this story, the situation has gotten much worse during the economic downturn.

Austin said in an interview that while he’s always seen people represent themselves in small claims, traffic, and family law cases, he’s also observed a startling avalanche of pro per in the civil realm, with more people fighting off debt collections and foreclosures. He ascribes the trend partly to the Internet — some defendants look up “debt collection” on, and feel that they can go without the expense of hiring a lawyer — but says it’s mostly a result of the bad economy: More and more people are finding themselves in desperate situations. And because their cases are in civil court — not criminal — the government has no obligation to provide these defendants with an attorney if they cannot afford one.

Pro per litigants also are flooding the courts at a time when the state and federal governments have fewer resources to help them. A spate of budget cuts has left the courts with fewer judges, fewer commissioners, mandatory furlough days, and dwindling coffers, all of which reverberates throughout the system — and makes it even tougher for pro per litigants who need legal assistance. Contra Costa County, for example, has eliminated commissioner positions in five of its departments, shuttered a courthouse in Concord, and deputized volunteer lawyers to adjudicate small claims cases. It’s laid off some of the clerks who traditionally helped pro per litigants get their papers in order, and reduced hours so that clerks’ offices now close at 1 p.m. every day. The line for help is so long, Austin said, that some people wait for an hour and a half and don’t make it to the window — or get there and find out they have the wrong papers, and are told to come back another day.

California’s civil court system, in short, has turned into a debtor’s purgatory. “Most people who come in here make $18 an hour, tops, and lawyers charge $250 an hour,” said Phil Rapier, a tenant lawyer in Oakland. “Nobody can afford that.”

The burden of “equal justice” has now fallen on nonprofit organizations like Bay Area Legal Aid and East Bay Community Law Center, as well as the resource centers located within the courts themselves. But there are not enough of them to pick up the slack.

Theoretically, we don’t have debtor’s prison any more, but Rapier thinks that our class disparities and the withering economy have prevented the courts from serving poor people, no matter how well intentioned they are. He pointed to the list of “unlawful detainer” cases posted outside of Judge Don C. Clay’s Oakland courtroom on a recent Friday, for people getting evicted from their homes. Roughly two-thirds of the defendants were pro pers.

Rapier shook his head dispiritingly. “These people here?” he said. “They’re getting wiped out.”

Like their peers in nearby Contra Costa, civil court judges in Oakland are feeling the effects of the sputtering economy. Judge Kimberly Colwell, who hears small claims cases on the third floor of the Alameda County administration building near Lake Merritt, said economic downturns always cause an explosion in debt collection, wrongful termination suits, and personal injury cases. “They trip over a crack in the sidewalk, and suddenly they need to sue the city,” she said of people who have lost their jobs and desperately need money. “Whereas they might have had insurance and brushed it off before.”

Colwell deals with a higher case volume than most civil court judges, and seldom does she see anyone arrive with an attorney. A typical weekday morning might include more than a dozen cases, each with its own mess of complications. At one recent hearing, two East Oakland residents disputed over culpability in an auto accident, but provided few details for Colwell to parse — one tried to claim $2,000 in damages, but had no receipt to prove it; the other didn’t speak English. A tenant tried to sue her landlord, citing a handshake deal that was never committed to print. A woman demanded thousands of dollars in restitution from United Airlines over lost jewelry, not realizing she signed a terms of service agreement that made jewelry unrecoverable.

Pro per litigants will often consult an Internet primer before coming in, then attempt to fight their cases the way a lawyer would, but don’t really know how. “There was an automobile repair case in which the plaintiff felt [he was] entitled to damages ‘under California law,'” Colwell said. “I asked which law. [He] wasn’t sure.”

She managed a wan smile. “I always say the Internet is a blessing and a curse.”

Budget cuts have pinched Oakland courts nearly as much as their analogues in Contra Costa County, though the effects often manifest in small ways, said Colwell’s clerk Melinda Guerrero. “That’s my Inbox,” Guerrero said, pointing to a thick stack of untouched manila folders on a filing shelf, midway through morning hearings on a Thursday. With Alameda County cutting staff and juggling operations — until this year, courts in Hayward and Pleasanton were routing their small claims cases up to Oakland — overload is the new normal, she explained. “They recently changed the phone system but they don’t have anyone to give refresher courses,” she added.

At this point, court budget cuts have become a Bay Area-wide scourge for low-income litigants. The courthouse in Pittsburg no longer accepts filings, so people with domestic violence or family law cases have to trek over to Martinez. That’s especially problematic for people who don’t own cars, said Ken Theisen, spokesman for Bay Area Legal Aid. “Folks have to take the bus, transfer buses three to four times, and the buses don’t come very often,” he explained.

Staff shortages in San Francisco and San Mateo counties have created a backlog of temporary restraining orders, and a number of them aren’t signed within 24 hours. Traffic court is another hornet’s nest, with many counties ill-equipped to handle the volume of cases that come in.

But debt collections, which began proliferating in 2008 after the Wall Street crash, are perhaps the saddest indicator of a court system so hobbled by cutbacks that it can no longer serve its population. Megan Ryan, a staff attorney at the East Bay Community Law Center who specializes in such cases, said that the vast majority of them result in defaults, which makes it extremely easy for the creditor to prevail, or pressure the debtor into a settlement.

“I think that’s the business model for a lot of these third-party companies like Cache, Midland Funding, and Portfolio Recovery Associates,” Ryan said of debt collection companies. “The hope is that someone will go into default, have no familiarity with the legal process, and not have an attorney to represent them.”

By the time a debt snowballs that far, the debtor usually has few resources to fight it. Most defendants can barely afford to pay rent or buy groceries, let alone hire a private attorney, and most lawyers won’t take a debt case on contingency because current statutes limit them to a paltry $800 remuneration. Unless a case involves some kind of juicy collection practices cross-complaint — such as an agency harassing the debtor’s employer, or calling late at night, in violation of federal law — it’s just not worth taking, Ryan said. And since many debtors aren’t aware of the laws, they don’t know to hire an attorney if the collection agency behaves inappropriately. They’re simply out of luck.

In fact, Ryan added, a debtor might have a perfectly solid defense, but not know how to use it. For example, if someone steals a person’s identity and fraudulently uses her credit card, and then the bank sues her for payment, that person might not realize — without the help of an attorney — that she can quickly win the case if the debt collector put a wrong name on the complaint, harassed her employer, or lost the bill of sale to prove it actually owned the debt.

Because Cache, Midland, and Portfolio all know the game a little better, it’s extremely easy to prey on self-representing litigants, Ryan said. “Once a person can’t answer the debt, then the debt collector can move forward — put a lien on the property, [ask for] wage garnishment, collect the judgment, and begin enforcing it,” she said. What’s worse, the collector will then lock the debtor into an unaffordable payment plan — say, $300 a month for a janitor who only makes a $1,200 monthly salary and has to support a family. “That’s what drives me crazy as an attorney,” she said. “People are really eager to settle because they don’t want to be in court, but then they work out a plan that [far exceeds] their financial circumstances.”

Attorneys at Mandarich Law Group, which represents Cache, declined to speak on their client’s behalf. Spokespeople at Portfolio didn’t answer requests for comment. Spokespeople at Encore Capital Group, which owns Midland, punted questions to their corporate communications director Julie Reynolds. She said in an email that Encore prefers to make “affordable, flexible payment arrangements,” and pointed to Encore’s Consumer Bill of Rights, which promises to “promote settlement” and exercise “the fair and reasonable use of litigation.”

The East Bay Community Law Center is currently pushing a bill in the state Senate — called the Fair Debt Buyers Practices Act — that would heighten standards for collection agencies to show they properly own a debt. Still, Ryan said, these agencies may always have the upper hand. Fighting against them is tough; winning is “highly unusual.”

Judge Austin is keenly aware of how that game plays out in court. And he empathizes with the people who stream through his doors everyday, citing laws they found on the Internet and looking befuddled when the lawyers start speaking to each other in Latin.

Raised in a blue collar section of San Jose, right at the time that the now-vaunted Silicon Valley was transitioning from orchards to paved-over sidewalks, Austin is known in Contra Costa as a common man’s judge — and sort of a local folk hero. His mother was a school secretary, his father worked on the production line at Hewlett-Packard, he was a jock in high school and got admitted to UCLA on a swimming scholarship. His bailiff describes him as “a good dude.”

Austin has had a varied career on the bench, from presiding over drunken driving court to handling murder trials, family law cases, business contract disputes, and high-stakes personal injury verdicts. In 2003, he awarded $28 million to a diver who’d broken his neck in a public swimming pool, which wound up being the highest injury award ever in Contra Costa County. The judge has a natural predilection for complex civil cases, but these days, he said, they’re fewer and far between. Civil law has instead become a laboratory of hard luck and social disparities. Austin said the number of debt collections on his calendar far exceeds the number of spats between corporate competitors. He spends several mornings a week entering judgment against the little guy.

Most debt collection court hearings are over in ten or fifteen minutes, quick enough to burn through half a dozen in the course of a single morning. In most instances, the debtor gazes pleadingly at Austin, but fails to present an oral argument. Austin listens to the well-paid lawyers on the plaintiff’s side, reviews copies of old bills, asks if the defendant has considered filing for bankruptcy. “Okay, well, I’m going to have to enter judgment on this one,” he said at least six times in the course of a morning.

And sometimes the steady trail of pro per cases winnows its way into Austin’s afternoon calendar, as it did on a recent Thursday. Four such cases awaited the judge when he sat down at the dais at 1:30, overlooking what appeared to be a starkly bifurcated courtroom. On one side sat a group of attorneys in cleanly tailored jackets and ties; on the other sat a loose collection of borrowers and defaulters. A middle-aged man arrived with his translator in tow. A mother clutched her six-year-old son’s hand. An older couple sat quietly in back.

Austin called the court into session and read a short litany of charges against a Latino man, Mr. Gomez, as he shuffled up to the stand. Gomez had owed $5,491.26 to Bank of America at the time he stopped making payments in 2009, and since then he’d accrued an additional two thousand dollars in unpaid interest and attorneys’ fees, putting him $7,265.76 in arrears by the spring of 2013. He was unemployed and working spotty part-time gigs that didn’t quite make ends meet. He listened to the bank’s declaration without flinching.

“Is there anything you want to tell me about it, before I enter judgment?” Austin asked, addressing Gomez patiently. The man threw up his hands. Austin suggested he make a payment plan, solicit help from a few pro bono attorneys, and consider filing for bankruptcy. Bank of America had handed its case over to a debt collection agency, which had itemized Gomez’s obligations, amassed a team of lawyers, and tacked on its own fees. The $7,300 bill would stand.

“They know they owe money,” the judge said wearily, as he left the courtroom half an hour later. “They’re not trying to shirk their duties, [but] they don’t even present a defense.”

He added that if Gomez had the luxury of an attorney, the outcome might have been different. Even bank collections aren’t bulletproof, and oftentimes the agencies misfile their paperwork or miscalculate the money owed, leaving holes that a trained professional could easily poke through. But because debtors usually can’t afford legal assistance, or don’t know how to get it, they seldom question the charges against them.

Austin became fascinated with do-it-yourself litigants eleven years ago, when he presided over his first family law case. Unversed in that type of law and its proceedings, he was hoping to lean on attorneys from both sides to help him out. Instead he walked into a courtroom and was faced with a befuddled husband and wife, and no one to represent them. “I called the case, and they stood up, and I looked at them, and they looked at me,” he remembered. “Nobody was there to explain what the dispute was about.”

Our legal system wasn’t really designed for cases without lawyers, he explained, and it can seem extremely punishing to anyone who arrives unattended. Every aspect of court — from the metal detector at the gate, to the bailiff’s gun, to the seemingly Byzantine architecture — seems designed to intimidate people into submission. Austin said that people occasionally stop him outside the courthouse the day before they’re scheduled to appear, just so they can ask how to find the room number. “Then they come in really early the next day, and they’re nervous, and they haven’t slept the night before,” he said.

Sometimes there’s nothing he can do to help. A man who walked into Austin’s court on a recent Tuesday wore a suit purchased from a second-hand store. The man said he was homeless; Austin told me later that it looked as though he’d just bought the suit that day. The man was fighting a collections case against a credit card company that had already filed a “request for admissions” — basically paperwork detailing the complaints against him.

“It’s a simple, hand-written reform that requires minimal answers,” Austin said. “You’re just supposed to say, ‘I deny.'”

If you don’t respond — and in this case, the man didn’t — the credit card company wins by default.

“He showed up, and he’d just bought this suit to come to court in, and he was very concerned about the charges against him,” Austin said, his voice softening. “And I had to say, ‘That’s it, the case is over — you already lost.'” And he was just looking at me like, ‘I can’t believe you won’t let me tell my story.'”

It would happen once more that day: same papers, same misunderstanding, different defendant.

The odds facing Felipa Martinez weren’t better than those in any other case — which is to say, they weren’t good. But if there’s one thing the 58-year-old woman doesn’t suffer from, it’s a lack of grit. Born in Mexico, she immigrated to the United States as an adult, eventually resettling in Union City to raise her daughter. Martinez said she would often work three minimum-wage jobs in the course of a week — cooking in fast food restaurants, serving lunch at a bingo hall, cleaning houses, washing dishes, or doing whatever else came her way — earning just enough money to make ends meet. She has the scars to commemorate a life of hard labor: burns on her calf from scalding water, knuckle burns and knotty knife-marks on her wrists from working as a line cook. When she was diagnosed with cancer, Martinez kept the news to herself for as long as possible. She describes herself, in a former life, as strong and fast, with 20/20 vision.

“Now I feel — how do you say it — impotencia,” she said in an interview, standing outside Austin’s courtroom with her daughter.

But that didn’t stop her from waging a fight.

Austin had two Cache collection cases on his calendar that day, and a representative from Cache was waiting outside by a window — he’d been subpoenaed to appear by Claire Johnson, a staff attorney from Bay Area Legal Aid representing another debtor. Before hearing Martinez’ case, Austin sent her outside to attempt a settlement agreement with the collector and his attorney, Jo-Anna Nieves. Martinez’ daughter offered $500 up front to settle all scores and have the debt forgiven, and Nieves was going to take it, but Martinez intervened.

“I said, ‘No, I have three root canals and she’s been saving money to pay for this,'” she snapped, turning to address her daughter. “If I go to jail,” she said, “don’t pay nothing.”

Plaintiff and defendant sauntered back into the courtroom after ten minutes of abortive negotiating. “Your Honor, we weren’t able to work something out,” Nieves said crisply. The trial would proceed. Nieves began her cross-examination.

“Did you open an account with Washington Mutual and use the card to make purchases?”

Martinez nodded. “Yes,” she said, meekly.

“Is the issue today that you can’t afford to pay?”


“Do you live … [on] Gatter Drive in Antioch, California?”

“At that time, yes.”

“Did you receive credit card statements there?”


“I have no further questions, Your Honor.”

Austin turned to Martinez, who launched into a long monologue about her credit card statements. The interest suddenly spiked when the bank name changed from Washington Mutual to Chase, she said. Then interest piled higher after it changed again, from Chase to Cache. There were charges on the bill that she said weren’t hers — a $600 line item for a Blockbuster video store in Texas, and another $300 purchase from the Cheesecake Factory. She’d tried to contest them, called various bank representatives, and attempted to negotiate a payment plan with the collection agency. Nothing worked. “Interes, interes, interes,” Martinez chanted, slipping back into Spanish. Her daughter blinked.

Austin began his speech. “I see a lot of people in this same situation,” he said patiently. “Have you talked to anyone about the possibility of bankruptcy?” Then he leafed through the bank statements from Cache with a quizzical expression. Nieves ground a stiletto into the floor uncomfortably.

“All of these bills are in Spanish,” Austin said, addressing Nieves.

“Okay,” she said, sounding flustered. “There’s a bill of sale and a redacted loan schedule,” she added, “and it shows the purchase from Chase.”

“That’s not enough to authenticate the record,” Austin countered. “I can’t figure out what’s interest and what’s not.”

Martinez stiffened, realizing her case had taken an unexpected turn.

Austin turned to Nieves again. “When I have these cases, I go through all the bills,” he explained. “I’m not able to do that here. Everything’s in Spanish. None of these are admissible.”

He paused as Nieves fluttered through her own notes, searching for a proper rebuttal. She said nothing. Her client was still waiting outside.

“I understand your position,” Austin said, then paused a beat. “I enter judgment in favor of the defendant.”

In five minutes of brittle questioning, Martinez’ entire debt had been scrubbed clean. She’d experienced a twist of fortune that seldom happens in Austin’s courtroom; he’d say later that at least 90 percent of cases result either in settlements, bankruptcies, or plaintiff wins. “This was just an unusual fact situation,” he explained. The collection agency didn’t have its paperwork together — which is surprisingly common, but hard to detect without a lawyer. Martinez got lucky.

For a moment, mother and daughter sat in stunned silence. Then they rose and shuffled out of the courtroom, arm in arm. They had a long drive back to Stockton, and a root canal to pay for.


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