Default Judgement Surge: Misery By Numbers

[Purveyor]

As the economy spirals down, the number of Minnesotans unable to pay their debts continues to shoot skyward, with a record number of default judgments filed in state courts in 2008.

Default judgments soared to 51,287 across the state last year, 39 percent more than in 2007, another record year, and 133 percent higher than 2006.

The default judgments largely involve unpaid credit card debt, but include other unpaid loans. They do not include foreclosures.

As a result of the default surge, the dollar amount of debt being demanded by creditors rose to $461.97 million in Minnesota 2008, a 58 percent increase over the year before.

No county handled more default files than Hennepin. Its district court processed 12,879 defaults in 2008.

"These files evidence the financial failure of people's lives," said Mark Thompson, Hennepin County court administrator.

Tom Stinson, Minnesota's state economist, said the central factor behind the default surge is the deteriorating job market. After the state added 9,000 jobs from December 2006 to December 2007, it lost 50,000 jobs from December 2007 to December 2008.

"When people lose jobs, they are more apt to default on their credit card debt," said Stinson. "And if they have large credit card debt, it is simply impossible for them to keep up if they lose employment. This is not likely to get better in the short term. We would expect to see even more defaults in 2009, because cumulatively we expect to lose 120,000 jobs in the state before the recession is over."

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[melm00se]

1. the title is a bit deceptive

there is a difference between judgment for defaulting on payment (you didn't pay your bills so the bank sued you) and a default judgment (meaning you were sued, didn't show up to defend yourself and a judgment was entered).