Kate Elengold of UNC and Sophie Laing Pine Tree Legal Assistance, Inc. have written Offsetting Justice: Using Government Power To Collect Private Debts, 175 Penn. L. Rev. (forthcoming 2027). Here’s the abstract:
Private creditors regularly hire third-party debt collectors to recoup debt on their behalf by contacting, coercing, and suing consumer debtors. Scholars, advocates, and policymakers have paid significant attention to this booming industry, which is pervasive and rife with abuse. But there is one third-party debt collector who has largely escaped attention and critique: the state itself. Although rarely discussed, the government regularly operates as a third-party debt collector for private creditors, collecting debt through its powerful and unique collection tools and then funneling those dollars to private creditors. This Article investigates the serious due process concerns that arise when the state intervenes in private debt collection. It identifies two distinct categories of this phenomenon: no process and faux process. In the no process category, the state collects debt on behalf of a private creditor outside the normal operations of private debt collection, leaving debtors with little protection. In South Carolina, for example, the state withholds tax refunds due to medical debtors and instead funnels that money to private hospital creditors. In the faux process category, the state allows private creditors to co-opt judicial processes for debt collection, limiting and undermining debtors’ rights. More than 200 district attorney’s offices, for example, contract with debt collectors to allow the collector to use the prosecutor’s seal and signature on repayment demand letters. In addition to recognizing the critical harm to debtors, this Article argues that the state’s intervention in private debt collection is also detrimental to the larger society and economy. When the state intervenes to collect debt on behalf of a private party, that action violates core principles underpinning offsets, conflicts with other important state priorities, and further entwines corporate and state interests at the expense of individual consumers. This Article recognizes, however, that there may be compelling reasons for the state to support private debt collection. Therefore, it concludes by offering a proposal that places guardrails around the state’s participation in private debt collection to balance the needs of debtors, creditors, and the state.
