When a debt collector decides to file a lawsuit against an alleged debtor, that decision might have more to do with where the defendant lives than with how much they allegedly owe. 

A new report from ProPublica claims that Nebraska — with its low fees for filing lawsuits, and collector-friendly state laws — has created the ideal situation for over-eager litigators, resulting in tens of thousands of collections lawsuits every year.

In 2013 alone, collectors filed some 79,000 lawsuits in Nebraska, for debts as small as $50.

Here are just a few of the important takeaways from the ProPublica piece:

1.) It’s about the costs — In Nebraska, the fee for filing a lawsuit is $45, making the often last resort of legal action a desirable and easy choice for collectors looking to obtain payments on overdue debts.

Because the cost to file is so low, filing a suit for a debt of just $100 can still be lucrative for collectors.

2.) Collector-friendly laws — According to ProPublica, Nebraska has less stringent standards for serving debtors with a lawsuit, making the process less of a hassle for companies.

For example, collectors aren’t required to personally serve the borrower with the lawsuit personally or provide documentation that the debts are legitimate.

3.) Small population, more lawsuits — The number of lawsuits filed in Nebraska far outweighed other areas where the population was significantly higher.

For example, Cook County, IL, where it costs $172 to file a lawsuit, has a population of five million people, but had the same number of lawsuits filed against consumers as were filed in Nebraska, with its population of about two million.

In New Mexico, which has a similar population to Nebraska, the cost to file a lawsuit is $77. Although the fee is still rather low, the number of lawsuits filed in 2013 was about one-third of Nebraska’s rate — about 30,000 lawsuits in all.

4.) A lower cost debt — Most of the debt collection suits filed in Nebraska in 2013 revolved around medical bills.

Of the 100 lawsuits reviewed by ProPublica, most sought less than $700, 40 were for debts of $500 or less, and four were for $100 or less. In comparison, suits filed in Cook County, where the fee is $172, averaged a debt of $3,000.

5.) Hundreds each day — Of the 79,000 lawsuits filed in Nebraska in 2013, nearly half were from one company, Credit Management Services.

CMS, as it’s known, has a team that works to persuade debtors to make voluntary payments. When this fails, the company files lawsuits. In 2013, that number totaled 30,000, or about 120 each work day.

While the company said in 2012 that consumers aren’t sued unless the individual has means to pay, CMS did not specify how it makes that determination.

6.) Not holding back — ProPublica reports that CMS uses a variety of aggressive tactics to collect on debts. In one case the company emptied a debtor’s bank account 11 times over a two-year period. In all but three of those debits the account had less than $100.

7.) Trying to change — Earlier this year, the Nebraska legislature passed a law that increased the fee for court filings by $1.

While the increase seems insignificant, it became a point of contention for lawmakers and debt collectors. The measure eventually passed 40-0, and was signed by the state’s governor.

For more on the correlation between low court costs and lawsuits, as well as information on CMS’ business practices check out ProPublica’s report.

For Nebraska’s Poor, Get Sick and Get Sued [ProPublica]

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