Walk the quiet streets of Jennings and ask residents how they came to be sued over a debt, and they will often tell you that there came a moment when they had to make a financial choice.
For Judy Harvey, a 64-year-old retiree who’s lived in the same two-bedroom home with her husband for 20 years, it happened after her hours were scaled back at work. For Gladys Clayborn, 59, who lives in a house around the corner, it was heart trouble that led to major surgery and permanent disability.
However it happened, they found themselves behind on their bills, and they needed to decide which to pay.
“When you rank those bills, you’re definitely going to put those things that are essential to health and safety — that you can’t function without on a day-to-day basis — first,” said Jones, the council member.
Sometimes it’s credit card bills that get pushed to the back of the line. Sometimes it’s an old medical bill or a loan with a 100 percent interest rate. And quite often in Jennings and other black communities in St. Louis, it’s the sewer bill.
The Metropolitan St. Louis Sewer District provides service to almost all of the city of St. Louis and the surrounding county. The bill is not usually a large one — the average monthly rate in 2012 was about $29 for a single family home — but MSD, unlike other utilities like electricity, lacks the power to shut off service to customers who fall far behind.
In 2010, MSD decided too many customers weren’t paying their bills, so it dramatically increased its collection efforts. It went from filing about 3,000 suits in 2010 to filing about 11,000 in 2012, more than any other company that year.
Most of MSD’s customers are white, but the suits were largely filed against residents of black communities like Jennings. ProPublica examined MSD’s court judgments against residents of lower- and middle-income neighborhoods and found that MSD obtained judgments in the mostly black neighborhoods at a rate about four times higher than in the mostly white ones.
When MSD sues, the debts can be quite small, even as little as $350. And the size of those debts may help explain why MSD files so many more suits in black neighborhoods.
See the black neighborhoods where collection suits hit hardest.
ProPublica’s analysis of court data for Newark and Chicago found that the debts that led to suits in mostly black neighborhoods were, on average, about 20 to 25 percent smaller than the debts of residents of mostly white ones.
In the Newark area, for instance, when a company sued a resident of a middle-income white neighborhood, the average balance was $3,466; in a black neighborhood, the average was $2,628.
This suggests white consumers are, in general, better able to resolve smaller debts.
Latanya Graves is a 38-year-old single mother of three who lives in Jennings. Sitting in her living room last August as her children tried to cook pancakes and sent smoke throughout her home, Graves remembered the desperation that set her on the path to having her wages garnished.
After a period of unemployment, she’d tried to save her home from foreclosure by taking out loans at sky-high interest rates — the only kind she could get. And with other more critical bills to pay, she’d let her MSD bill slide.
People in her position often don’t have other options, Graves said. “Hoping that if they don’t pay this bill for a few months and it doesn’t get cut off,” she said, “they could see that as a safety net for them.”
Later, Graves’ choices resulted in lawsuits: She fell hopelessly behind on the loans when she was laid off from her clerical job a second time and didn’t see a way to catch up on her sewer bill. Then the suits led to garnishments. With the interest continuing to run on her high-cost loans, the debts had grown from hundreds of dollars to thousands.
For months at a time in 2011 and then again in 2012, a quarter of her pay was gone.
“It’s a big burden on your shoulders,” Graves said. “You go to bed thinking about, ‘How am I going to pay these bills? How am I going to do this?’ You wake up thinking about it. You go to work thinking about it.”
Earning about $15 an hour at the time, she had to scramble, she remembered, to get to the end of the month. She worked as much overtime as possible. Her parents helped out by buying groceries.
“It brings back a lot of memories, a lot of bad memories,” she said, wiping away tears.
Lance LeComb, MSD’s spokesman, said the company had no demographic data on its customers and treated them all the same. The racial disparity in its suits, he said, is the result of “broader ills in our community that are outside of our scope and exceed our abilities and authority to do anything about.”
MSD, he said, has attempted to address those ills by hiring more minority workers. The utility is also willing to work with delinquent customers and “be as generous as possible with repayment terms.” But it has a duty to pursue debts to the fullest extent, he said. “We owe it to all our customers to keep our rates as low as possible and to ensure that they are treated fairly and equitably.”
The utility also has to be aggressive because it needs to raise revenue, he said, primarily to pay for the billions of dollars of infrastructure improvements required to bring the sewer system up to environmental standards. The average 2015 monthly bill is about twice what it was in 2003.
MSD does have a program to reduce payments for lower-income customers. According to an estimate released by MSD earlier this year, about 39,000 customers are eligible. But as of June, only about 2,300 were enrolled. MSD is “not satisfied with this level of enrollment,” LeComb said.
MSD is far from the only company flooding St. Louis courts with lawsuits over small debts. In Missouri and across the country, debt buyers are a common presence in local courtrooms. The companies buy debts for pennies on the dollar and then try to recover what they can from debtors.
The industry began filing suits in large numbers in the early 2000s, and in all three of the cities ProPublica studied, debt buyers filed the most suits of any type of plaintiffs between 2008 and 2012. In the Newark area, more than half of the 66,000 court judgments won against residents of mostly black neighborhoods stemmed from debt buyer lawsuits.
Debt buyers primarily buy defaulted credit card accounts, but the data shows that they routinely sue over smaller balances than banks do. In the Chicago and Newark areas, debt buyers filed suits with an average balance about 30 percent smaller than the average suit by a major bank.
Perhaps as a result, debt buyer lawsuits were far more numerous in black communities, ProPublica found. In Newark, for example, the rate of judgments was about twice as high among middle-income, mostly black neighborhoods than among the middle-income, mostly white ones.
Jan Stieger, executive director of the debt buyers’ trade group DBA International, said debt buyers don’t know the race of debtors when they buy accounts. Any racial gap in the pattern of suits, she said, is not the result of debt buyer behavior. And debt buyers typically try other methods, such as collection calls, before suing.
“Truly, nobody is treated differently in this process,” she said.