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The Routinization of Debt Collection: An Essay on Social Change and Conflict in the Courts

Published online by Cambridge University Press:  01 July 2024

Robert A. Kagan
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Abstract

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In an era of supposed judicial imperialism, the decline of judicial involvement in an important policy area raises questions about the dynamics of legal change. In the past thirty-five years, despite large increases in the volume of loans and delinquent debts, there has been a sharp decline in contested debt cases in state supreme courts and an apparent decline in trial courts as well. In seeking an explanation, this article concludes that for both creditors and debtors, litigation has become more costly in relation to alternative courses of action such as renegotiating payment terms, declaring bankruptcy, or writing off unpaid debts. The attractiveness of nonlitigational alternatives is attributed to (a) the “legal rationalization” of credit transactions by institutional lenders, (b) increased litigation costs stemming from enhanced debtors' rights, and most importantly, (c) “systemic stabilization”—welfare state measures, economic regulation, insurance arrangements, and market diversification that facilitates the attenuation and spreading of financial losses.

Type
Research Article
Information
Law & Society Review , Volume 18 , Issue 3 , 1984 , pp. 323 - 371
Copyright
Copyright © 1984 The Law and Society Association

Footnotes

*

The research reflected in this article was supported in part by a grant from the National Science Foundation Program in Law and Social Science, Grant No. GS-384-13. Much thanks is due Terri Jennings for assembling and analyzing information concerning debt collection law and practice, and to Tom Jensen, Ed Rubin, Frank Munger, Bliss Cartwright, and Rick Lempert for their substantive and editorial advice.

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