
So you all know how it works, your bank or other creditors sell your debt to a collection agency for pennies. The collection agency does everything to settle the debt because as long as they get something, they're making money. Collection agencies make more money off default judgments than anything, and if the debt is a minimal amount, people will generally just pay it, whether they actually owe it or not.
Default Judgments
A default judgment is when a court gives a judgment by, you guessed it, default. Typically this occurs when a party does not answer a complaint, or at some point they simply ignore the law suit. Once it becomes apparent that a party is not responding to pleadings or taking any steps to defend himself/herself, the court can simply grant a judgment in favor of the opposing party, and give them anything they asked for. With a judgment, the prevailing party can garnish wages, garnish bank accounts, force a sheriff's sale of personal property, etc. Collection agencies probably resolve most of their cases by getting a default judgment against debtors.