The calls would come at all hours of the day, sometimes as early as 6 AM. Whenever Matt Holland answered the phone, the nameless individual on the other end would be pushy and disparaging, then would turn menacing. The nature of the call was always the same: You have to pay your debt; there is no way out.
Years earlier, Holland, who now lives in Spring Hill, Florida, had been arrested and spent some time in prison for breaking into cars with friends to steal stereos. Upon his release, Holland found himself facing $3,000 in debt from state court fees. It wasn’t long before that debt was passed from the government to a private debt collection firm, Linebarger Goggan Blair & Sampson, LLP.
Linebarger, Holland soon discovered, was unrelenting. The firm rang him constantly at inconvenient times, since state-owned debt isn’t restricted by federal debt collection rules that prohibit calls before 8 AM. The company flooded his mailbox with threatening letters, too.
The onslaught eventually got so bad Holland told the firm he’d moved just to get the barrage to stop.
“Nothing is more important than you paying them,” he told the Daily Poster.
Now the thirty-three-year-old father has finally escaped the worst, thanks to a state program that put him on a repayment plan. But he’s one of the lucky ones.
Across the United States, court debt has ballooned as states have turned to court costs, fines, and fees as revenue streams. A recent report by watchdog group Fines and Fees Justice Center found that court debt in the United States now totals at least a staggering $27.6 billion. That figure is a low estimate, the group noted in the report, because it relied on incomplete data collected from only twenty-five states.
To handle the collection of that debt, states, and municipalities — as well as the Internal Revenue Service — are increasingly turning to private firms, which in some states can add up to 40 percent surcharges onto the fees. In aggregate, that can translate into billions of dollars of payouts for the debt collectors.
“Linebarger is one of the biggest companies to . . . capitalize on this outsourcing of traditional government functions to for-profit companies,” explains Leslie Bailey, an attorney with the group Public Justice who is currently involved in a lawsuit against the company in Iowa for allegedly violating state and federal law.
A spokesperson for Linebarger, which is also hired by state and local governments to collect property taxes, water bills, and other debts, told the Daily Poster that it does business in twenty-two states, but would not go into further detail.
“As attorneys on behalf of these entities, we are not ethically permitted to disclose information that belongs to our client(s) without their express authority,” the spokesperson said.
Companies like Linebarger make money solely through fees they charge to debtors — and those charges can prove to be debilitating.
“The state doesn’t have to spend any money to collect its own debt,” explains Bailey. “They just outsource it to a company like Linebarger, and instead of getting paid by the state for the work that they’re doing to collect the debt, they just tack on these user fees so that the criminal defendants, who are already so poor that they can’t pay this debt, now have this additional fee on top of it.”
The fees charged by Linebarger and other private collection firms add up. A review of a hundred eleven contracts between private collection firms and sixty-five Florida counties by the Daily Poster and Fines and Fees found that the minimum fee tacked onto court debt was 25 percent. A vast majority of the contracts added a 40 percent fee, the maximum allowable under state law.
Linebarger had contracts with nearly half of the counties reviewed, and all of those contracts involved the firm charging at least a 25 percent fee to each debtor.
The collection practices of private firms like Linebarger that handle court debt are not regulated by the federal government. State-owned debt has been treated as exempt from the Fair Debt Collection Practices Act of 1990 and as a result, firms hired by government agencies to collect outstanding debt regularly engage in what many observers characterize as abusive and harassing practices.
A CNNMoney exposé from 2015 revealed that the firm was sending threatening letters to debtors, warning that nonpayment of their court costs and the firm’s collection fees could lead to arrest and jail time, suspension of their driver’s licenses, and garnishment of wages for even minor offenses under certain circumstances.
Bailey and her co-counsel filed a complaint in September 2020 alleging that Linebarger’s debt collection practices in Iowa have violated state law. The complaint also alleges that the Fair Debt Collection Practices Act applies to the case and that the company violated it.
“Linebarger’s letters fail to itemize the debts or provide verification rights notices,” noted the complaint. “They also mischaracterize the amounts owed and contain false and misleading statements, including threats that failure to pay may result in driver’s license revocation or contempt of court, which in Iowa can mean arrest and jail. The letters fail to make clear that a debtor cannot lawfully be jailed for failing to pay court debt unless a court determines the nonpayment was willful.”
A letter sent from Linebarger to one of the plaintiffs uses the auspices of state authority to threaten a host of severe consequences.
“Until the Court receives full payment or appropriate contact from you, the case against you will remain active, and you may be subject to appropriate remedies available to the State and Courts,” noted the letter. “Iowa law authorizes enforcement actions that may be pursued by the State of Iowa and its Courts that may include such remedies as: contempt of court proceedings; refusal to renew vehicle registration; garnishment/execution on wages/assets; liens on real property; driver license revocation; offset of State refunds, including tax refunds; and forfeiture of money owed to you by the Clerk of Court or the State of Iowa.”
Alex Kornya, an attorney with Iowa Legal Aid working with the plaintiffs, told the Daily Poster that the Iowa legislature has since cancelled its contract with Linebarger.
“Now, debt that used to go to Linebarger is assigned to our state department of revenue for collection, and some legislation that just passed recently eliminated any additional fees, so there will no longer be additional collection fees charged by anyone, whether it be Linebarger or the department of revenue,” says Kornya.
Still, he explains, in response to the lawsuit against Linebarger, the Iowa legislature recently passed a bill that would “potentially make it harder to file a suit like we did, at least under the state act.”
“Getting Blood From a Stone”
The problem with private debt collection companies like Linebarger acting as arms of the court, say activists, is that unlike the court, they have no incentive to let debtors off the hook. The firm’s profit model is built on extraction, leaving debtors without any options. Worse, there are some instances where unpaid court debt can lead to jail time, such as when the debtor is found to be deliberately avoiding payment or happens to live in a jurisdiction that still relies on debtors’ prisons.
“For the millions of Americans struggling with court fines and fees, private debt collection intensifies a vicious cycle of poverty and punishment that’s nearly impossible to escape,” said Sarah Couture, Florida deputy director at the Fines and Fees Justice Center. “Here in Florida, with our absurd private collection fee of up to 40 percent, we’ve become a poster child for virtually everything that can go wrong when government budgets are funded through regressive monetary sanctions.”
“Attempting to collect old court debt from people who don’t have any money is like getting blood from a stone — the vast majority is simply uncollectable,” added Couture. “When cities and states rely on fines and fees to generate revenue, it’s a lose-lose situation for both residents and their government. The only winners are the shareholders at predatory companies like Linebarger. Policymakers have much more efficient — and much more equitable — ways of raising revenue at their disposal.”
Data suggests that private debt collection just isn’t worth the damage it does to lower-income Americans. States and municipalities generate minimal revenue from the effort, despite the harassing collections practices. For example, according to a report from the Florida Clerks of Courts Operations Corporation, the total amount sent to collections in Fiscal Year 2018–19 was more than $247 million, while the amount received was just over $24 million — about 10 percent of the total.
The real benefits of the arrangement go to the private collection firms. Linebarger’s estimated annual revenue is between $100 million and $500 million, according to the research company IncFact. Indeed, a 2011 report from insideARM, a media outlet serving the collections industry, offers “10 Tips to Prosper in Collecting for Government Clients” and notes that the collection of court debt is particularly lucrative.
“Target judicial, justice, and revenue agencies for the largest share of the public delinquencies market,” the report reads. “In some jurisdictions, these three areas account for about 90% of delinquencies. In order to be competitive when bidding on government contracts, you should be able to demonstrate expertise in legal areas such as wage garnishment.”
At the time of the report, a partner at Linebarger estimated that the company expected “to recover close to $1 billion in delinquent accounts receivable this year” for public sector clients.
Congress is trying to crack down on debtor abuse. Last month, the House passed a bill called the Comprehensive Debt Collection Improvement Act, which would apply consumer protections of the Fair Debt Collection Practices Act to debt owed to federal agencies and states. This would prohibit companies like Linebarger from harassing debtors.
Private collection firms have lined up against the legislation. ACA International, the debt collector lobbying group leading the fight, announced earlier this month that Lineberger just signed up as a new member of its coalition.