As someone who used to work as a paralegal for a commercial collection law firm... my experience was as follows (other firms may be different, etc.). I realize that some may disagree with my assessment, but I'm trying to explain how I saw it (again, from a limited perspective) for a few years:
1. We made several attempts to contact individuals before we sued them. In almost every case, someone who received a debt-collection letter would either (a) respond to it, and ask to work out a repayment plan, or (b) completely ignore it. In almost every (a) case, the client would agree to accept ANY repayment plan (e.g., $50/month on a $10,000 debt). I don't remember ever seeing a case where a client deliberately screwed over a debtor making an attempt at repayment, even if it seemed unreasonable (e.g., $50/month on a $10,000 debt) In almost every case, this agreement (a consent judgment) would FREEZE any interest on the principal.
2. At least in Georgia, the "stack of paperwork" is MAYBE 7 pages. It's pretty clear, even if you don't speak lawyer, that you need to contact the Plaintiff's lawyer, or file a response within 30 days of receiving a summons. Again, if you write, email, call, etc. -- in my experience -- people were willing to work with you. However -- again, this is my experience -- if a Sheriff rings your door bell, verifies your identify, and hands you a stack of legal papers -- you should probably read through them.
That being said, I can see how people who can't read could get screwed over by the system. But, in my--admittedly limited--experience, anyone who called the law office after being served got a very fair chance to dispute the debt, or negotiate a deal. I'm not going to say that this holds true for every law firm. But, in my experience, most of the people who ended up with a judgment/garnishment against them ignored several* summons.
*Again, in Georgia, you would have received a summons for the original lawsuit; you would have ignored it for at least 45 days; then the Plaintiff would have filed another lawsuit, which you would have to be served with, and you would have had to ignore for 7+ days before any money left your account.
Finally, the interest rate rules among states are crazy (and maybe the Feds should step in here). In some states, you can have a judgment entered against you and pay .01% interest on the judgment amount, while in another neighboring state, you might pay 9%+on the same amount. I agree that this isn't fair, and needs to be addressed.
