A recent University of Michigan workshop, hosted by U-M Poverty Solutions, drew more than 50 lawyers, policy makers, students, and coders from around the country to tackle the pressing issue of predatory debt collection and its impact on Michigan’s families and legal system. The driving force behind the event was second-year law student Malcolm Phelan.
The statistics are staggering: Twenty five percent of Michiganders have a debt in collections, including more than 50 percent of Michiganders of color.
“Debt collectors buy debt for pennies on the dollar and then sue debtors for the full amount,” Phelan said.
With help from former Michigan Supreme Court Chief Justice Bridget Mary McCormack, who also is an adjunct professor at Michigan Law; Matthew Andres, ’02, a clinical assistant professor of law; and Poverty Solutions' Trevor Bechtel, who also is an adjunct lecturer in U-M’s School of Social Work, Phelan brought together a wide range of practitioners and students to develop approaches that could support longstanding reform efforts.
“There are so many people interested in helping solve critical societal problems—sometimes they just need to be connected and given space to work,” he said.
At the weekend-long workshop, teams developed more than 20 new approaches for reining in predatory debt collection, lessening the barrage of filings on local court systems, and providing information and resources to low-income Michiganders facing debt-related lawsuits.
Andres, who chairs the Justice for All Commission Debt Collection Working Group, noted that of the more than 200,000 debt collection cases that are filed in Michigan courts annually, most result in a judgment for the creditor without a hearing ever taking place.
While experts around the country have made strides to improve the fairness and legitimacy of how debt is collected through the courts, “The Innovation Workshop brought many of those experts together in the same room with smart, creative students from a variety of disciplines in a well-structured problem-solving process,” Andres said.
“The out-of-the-box thinking the workshop encouraged yielded innovative ideas for products and policies that could be game changers for Michiganders facing the harsh consequences of debt.”
Attendees were led through a design thinking process by Bridgette Carr, ’02, clinical professor of law and director of the Human Trafficking Clinic, and Scott TenBrink, assistant director of civic engagement at U-M’s School of Information. Teams then designed and prototyped ideas, including an online chatbot that would provide automated texts to defendants alerting them about critical court dates and offering referrals to legal aid organizations. Another concept was a computer application for court systems that could scan filings from debt collectors to ensure that the debt was legally owed. Other concepts were designed and will continue to be explored by participants and participating organizations.
“Poverty is a set of interlinking systems that don’t work for people facing economic insecurity,” said Bechtel. “Debt can be one of the most challenging and pernicious barriers to prosperity, so we were delighted to see the ideas and energy generated by this event around this critical issue.”
Phelan applauded the collective excitement and creativity of the participants.
“It was inspiring to see so many students and professionals excited to spend a full weekend working together to address the critical issue of debt collection in Michigan. The goal was to bring together practitioners who have spent decades working on these issues with coders, designers, and policy researchers who could bring new technologies and ideas to the effort. Based on the thoughtful and innovative solutions that were produced, the event was a resounding success.”
Additional presenters and participants at the workshop included Michigan Supreme Court Justice Elizabeth Welch,Washtenaw County Prosecutor Eli Savit, ’10, and State Sen. Jeff Irwin, as well as representatives from national organizations the Aspen Institute, the Pew Foundation, the Legal Services Corporation, the American Arbitration Association, and the Princeton Debt Collection Lab. Michigan organizations included the Detroit Justice Center, the Michigan Poverty Law Program, and Legal Services of South Central Michigan. Students joined from U-M’s Law School, Ford School of Public Policy, School of Social Work, and College of Engineering as well as from Michigan State University College of Law and Georgetown Law School.
The event was sponsored by Michigan State University’s Center for Law, Technology, & Innovation, the American Arbitration Association, and U-M’s School of Information.