Court-Enforced Debt in Hamilton County, TN by Community Foundation of Greater Chattanooga

September 2026

Court-Enforced Debt in Hamilton County, TN

Acknowledgements We are grateful to everyone who contributed to this report in ways large and small, including: CFGC Board of Directors Coeo Public Affairs Kerry Hayes Emily O’Donnell Law Hamilton County Sessions Courts Clerk Larry Henry Judge Christie Sell Judge Alexander McVeagh Shawn Johnson Katie Raines The Pew Charitable Trusts Erika Rickard Giulia Duch Clerici Lester Bird

To learn more, contact: Community Foundation of Greater Chattanooga 1400 Williams Street, Chattanooga, TN, 37408 423-265-0586 CFGC.org

Letter from the President & CEO

The Context

The Challenge

Solutions & Results

The Work Ahead

Lessons Learned

References

Table of Contents | Court-Enforced Debt in Hamilton County, TN 2026

Table of Contents

Letter from the President & CEO You work hard. Maybe you’re a single parent or grandparent, holding down a full‑time job and picking up extra hours wherever you can. You’ve got people depending on you—children, aging parents, or sometimes both. Between the mortgage, groceries, and the cost of getting to and from work, things are tight, but you’re making it work. You even have a few goals in mind: finishing a degree, replacing an unreliable car, taking a step that might open the door to a better job. Then life happens. A medical issue. A car repair you can’t put off. An air‑conditioning unit that quits in the middle of July. With limited options, you take out a payday loan or put the expense on a credit card with a high interest rate. Suddenly, what felt manageable starts to feel shaky. A payment gets missed. You’re juggling so much that it’s hard to keep track of everything. Then another unexpected expense comes along—a child needs dental work, or an older relative needs care. More work, more bills, more strain. The future you were planning for starts to feel farther away. Mail begins to pile up. Some of the notices are so technical that it’s hard to know exactly what they mean. You set them aside, telling yourself you’ll deal with them when things calm down. But things never quite do. Then one week, your paycheck is smaller than usual. Much smaller. You ask why, and your employer explains —awkwardly—that a portion of your wages is being garnished because of a court order. She didn’t want to be the one to tell you, but she didn’t have a choice. These are incredibly difficult situations. And while it’s true that adults who take on debt have a responsibility to repay it, that reality doesn’t prevent us from asking a reasonable question: is there a way for the system to work more smoothly, more clearly, and in a way that helps people meet their obligations without losing their financial footing? Who shares in the responsibility for making things better?

By combining our strengths across sectors, we can improve the systems that shape people’s daily lives and create clearer, more supportive pathways for individuals and families who are working hard to meet daily needs and responsibilities. Our work to increase accessibility, fairness, and transparency in court-enforced debt processes is one example of how shared partnerships can help people in our communities maintain stability today and build a stronger foundation for tomorrow. We invite you to be part of this work as we continue creating solutions that move our community forward. In gratitude,

Maeghan Jones President & CEO

Letter from the President | Court-Enforced Debt in Hamilton County, TN 2026

We believe that shared challenges require shared solutions.

The Context Several years ago, our board and staff gathered to ask community leaders: how can we make the greatest impact with the resources entrusted to us? What we heard in response was both clear and urgent— poverty and limited economic opportunity were holding too many people in our community back. Not just in isolated cases, but in ways that affect entire families, employers, and the long-term prosperity of our city. That moment also helped clarify our role as not only the steward of charitable resources, but also as a partner, a convener, and a catalyst for addressing the challenges that shape opportunity in our region. Since then, we’ve focused on increasing economic opportunity, on what it really takes for individuals and families to achieve stability and move forward. One thing became increasingly clear: even small financial setbacks can become long-term barriers to success when systems aren’t working for people. In 2020, as the COVID-19 pandemic continued to impact day-to-day life, we received a request to help those who were going to be impacted by the lifting of the federal eviction moratorium. We worked with the City of Chattanooga, Habitat for Humanity, Chattanooga Regional Homeless Coalition, and Legal Aid of East Tennessee, to create the Eviction Prevention Initiative (EPI) which provided a variety of resources to ensure that individuals and families in crisis could stay housed and landlords (who were depending on rental income) could continue to receive rent payments. Through our work with EPI, we continued to look deeper and saw how debt —especially court-ordered debt—can limit people’s ability to recover from a financial set back. For many, it isn’t just about what they owe, it’s about the ripple effects of damaged credit, lost wages, and ongoing fees that make it harder to stabilize income and plan for the future. We began our partnership with The Pew Charitable Trusts (Pew) and our local General Sessions Court in 2022 and set out to better understand how court‑enforced debt collection affects people in our region. Our goal was simple: to get a clearer picture of what many local families are

What we didn’t anticipate was how much we would learn—or how much this work would reshape our understanding of everyday financial strain in Hamilton County. Again and again, we heard the same message from partners, employers, and families themselves: when people are working hard yet still struggling to cover the basics, it becomes incredibly difficult for them to plan ahead, save, or build any kind of cushion. And when that happens at scale, the effects ripple across communities. Economic opportunity can be defined in many ways, but at its core, it’s about whether each generation has a fair shot at doing better financially than the one before it. Most people—regardless of background—want the same things: the ability to shape their own lives, provide for their loved ones, and create a sense of stability that lasts. But for many ALICE households—families who are Asset‑Limited, Income‑Constrained, Employed—those goals are increasingly out of reach. According to the United Way of Tennessee’s 2025 ALICE report, more than one in three Hamilton County households cannot reliably afford basic necessities despite being employed1. At the same time, nearly one-third of Tennessee households have some amount of debt in collections. When wages don’t keep up with rising costs, even a small setback can push a family into a financial spiral.

The Context | Court-Enforced Debt in Hamilton County, TN 2026

experiencing and to understand how those experiences shape their ability to stay economically stable.

The economic shutdown during COVID‑19 made this even clearer. As incomes dropped, the risk of eviction rose sharply, especially for households already stretched thin. In response, the Community Foundation and local partners worked to stabilize families and keep them housed through the Eviction Prevention Initiative. That work also allowed us to see a pattern: many families facing eviction were also carrying significant household debt. The stories behind the numbers were sobering. Single parents and grandparents juggling multiple jobs, unable to earn enough to cover both daily expenses and growing credit card balances. Young workers trying to advance in their careers while managing student loans. A family with an unexpected medical bill draining their savings. And in some instances, individuals were unaware that a court case had been filed against them to collect on debt.

What became clear was that the current system wasn’t working well for anyone. Creditors struggled to recover what they were owed. Debtors faced legal fees and garnishments that made it even harder to regain stability. Employers processing garnishments absorbed the cost of staff time, legal review and adjusting payroll systems. Courts were overwhelmed by the volume of cases. And the process itself was often confusing and difficult to navigate. Working with the Hamilton County General Sessions (Civil) Courts and Pew, CFGC and our partners began identifying practical steps to make the system more efficient, more transparent, and easier for people to engage. This report outlines what has been done so far and where we believe improvements can continue. Our work is ongoing, and so is the community’s effort to help people achieve economic stability and move forward. We remain committed to supporting solutions that make everyday life more manageable for the people who call Hamilton County home.

We remain committed to supporting solutions that make everyday life more manageable for the people who call Hamilton County home.

ThinkTennessee’s landmark 2025 State of the State report2 revealed that Tennessee had the unenviable distinction of being ranked 42nd in the nation in both poverty rate and past-due debt—14% and 17.7% of our population, respectively. According to a March 2025 report by the University of Tennessee's Boyd Center for Business & Economic Research3, the state exceeded the national average in auto loan debt and had a notably higher student loan delinquency rate (4.82%) compared to the U.S. figure of 4.20%.

TENNESSEE IS 42nd IN THE NATION WITH

17.7%

OF OUR POPULATION CARRYING PAST-DUE DEBT

The average Tennessean carried per capita household debt of $53,270 in 2023, which is actually below the national average of $60,690. According to the American Community Survey,4 however, the average income in Tennessee was $71,997, which was 11.8% lower than the national average. In terms of income, Tennesseans proportionally carried the same or greater debt than other Americans. Debt grew at a compound annual rate of 5.7% since 2018, which matched the growth rate of median household income over that same period.

32%

The Challenge | Court-Enforced Debt in Hamilton County, TN 2026

The Challenge

OF TENNESSEE’S DEBT IS IN COLLECTIONS

Even more significantly, a disproportionate share of Tennessee's debt was severely distressed—meaning that it is in or at high risk of default. 32% of Tennessee's debt went to collections, compared to 26% nationally, and the state ranked 49th in non-business bankruptcies. Distressed debt not only limits individuals’ access to more affordable borrowing terms but may also compel them to choose between paying for essentials—food, housing, medication—and saving for the future.

In 2022, the Community Foundation embarked on a year-long process of research to understand how civil debt was impacting the Hamilton County community and to identify opportunities to improve debt collection policies and practices. This work was supported by a grant from Pew, but it was only possible because of the close relationships the Foundation had forged with members of the local General Sessions bench through the Eviction Prevention Initiative. The research included a review of tens of thousands of cases and dozens of interviews with community members who interacted with the court system, including judges, attorneys, consumers, creditors, employers, and community leaders. Our research5 revealed how this problem of household debt affecting economic stability shows up in local courtrooms: an analysis of court data from 2016-2022 found that in an average year, some 8,500 debt collection lawsuits will come before our General Sessions judges. Interestingly, across all these cases, the average amount of debt was relatively modest: around $2,000. Nearly half of the defendants in these suits had income of more than 300% of the federal poverty level (FPL). At the time of the initial data analysis, this would mean an annual income of around $90,000 for a family of four. A number of unique obstacles face defendants engaged in a debt collection lawsuit. Many of these obstacles ultimately highlight the need for modernization of the court system.

AN AVERAGE OF

8,500

DEBT COLLECTIONS CASES COME BEFORE GENERAL SESSIONS COURT

Early on in our work with the Hamilton County General Sessions Court, one of the judges compared the courtroom to a surgical ward in which many of the processes and tools had not been modernized since the 1970s. Policies and community needs have changed, but court processes have often not been updated alongside them.

The first obstacle facing most people sued for a debt: knowing about the lawsuit.

In cases reviewed from 2020-2022, 56% of consumer debt collection cases filed in Hamilton County General Sessions Court resulted in a default judgment against the consumer. This means that a judge had no choice but to rule in favor of the plaintiff simply because the defendant did not appear in court. At the time of our research, the court did not send any notice of a default judgment; the first time a person may learn about this judgment was when a debt collector initiates a garnishment on their wages or puts a lien on their property.

56%

OF CONSUMER DEBT COLLECTION CASES FILED IN HAMILTON COUNTY GENERAL SESSIONS COURT RESULTED IN A DEFAULT JUDGMENT AGAINST THE CONSUMER

The Challenge | Court-Enforced Debt in Hamilton County, TN 2026

The civil debt collection system operates with a series of unintended but damaging information gaps. In 2022, a civil summons received by a consumer in Hamilton County provided only the most basic information about the claim, without reference to legal resources or official County seal. The information on the summons has since been expanded (see Fig. 1, page 10). Still today, the summons provides very limited instructions on how to contest the claim and file a claim for exemption from seizure of up to $10,00 in personal property as provided by Tennessee law, and these instructions are in small print on the back page of a trifold summons.

While there are many reasons a person may choose not to attend a court hearing—inaccessible child-care, inflexible work schedules, apathy that attendance will make a difference in the outcome—our interviews revealed that some defendants never even knew there was a case against them. Others received the summons without a County seal and from an unrecognized creditor and believed the summons to be part of a scam. Even when a defendant does know they are being sued, they must incur the costs of legal counsel or appear on their own behalf, almost always against professional lawyers representing their creditors or third-party debt buyers.* Third-party Debt Buyer

A company that purchases delinquent accounts from original creditors (like banks or hospitals) at a deep discount and then attempts to collect the full balance.

ORIGINAL SUMMONS

Fig. 1

12345678

4 ABC Company

John Doe

123 Main Street, Anywhere, TN 123-456-7890 7/30/2025

John Doe

11:00

ABC Company suit on a sworn account fo the balance ue on a Flex Loan Agreements in the amount of

789 Market Street, Anytown, TN

$4321.98,plus attorney’s fees of $1234.56 for a total of $5556.54 plus court costs and private process server fees.

7/30

Jane Doe, Attorney at Law 987-654-3210

New Addition

REVISED SUMMONS

New Addition New Addition

3 2

ORIGINAL

Limited information to contact both parties in the lawsuit

ORIGINAL

Unclear that this is the date and time for the defendant to appear in Court

ORIGINAL

Very limited information on service of process

ORIGINAL

Type of dispute is not clearly labeled and no clarifying language

REVISED

More information to contact both parties in the lawsuit, including the defendant’s telephone number, which allows for text message reminders

REVISED

Language clarifying that this is when to appear in Court, as well as sections to reflect updated processes and procedures

REVISED

More information about service of process, including type of service and a sworn statement

REVISED

Type of dispute is clearly labeled. Section includes additional types (aiding data collection) and clarifying language (such as “Eviction”)

Figure 1 (pg. 10) shows both the original summons and the revised summons with important sections highlighted in red.

The judge cannot provide advice on the case to either party, and many defendants are unaware of the resources or options available to them. This dynamic can often disrupt the defendant’s already-precarious economic stability and hinder their access to resources or opportunities to influence the lasting impact of the court judgment. The "Slow Pay Motion" is a legal tool that allows defendants to repay their debt in manageable installments without facing wage garnishment or liens, but the summons does not mention it as an option, and it is used in only 5% of cases with a judgment. More recent data from the first quarter of 2026 affirms this trend with only 140 slow pay motions for 2,149 cases filed over those first three months. While consumers clearly suffer from these systemic inadequacies, they are not the only parties who do so. Courts are inundated with debt collection cases and have limited resources to develop and implement new processes that enhance efficiencies or improve transparency. Creditors who lawfully pursue debt repayment are also unsatisfied with the status quo. When more than half of these cases result in default judgments, creditors must try to collect debts through the blunt instruments of garnishment and liens rather than reaching negotiated, sustainable repayment agreements. Moreover, employers who must process wage garnishments do so at their own expense and legal risk. Our research of cases in Hamilton County between 2016 and 2022 showed that debt collectors sued more than 450 businesses for their employees’ debts and were successful in receiving a judgment to collect directly from the business in 58% of those cases. A system that more clearly and consistently informs defendants of their options would likely produce more repayment for creditors, not less. Systemic problems of this scale and complexity rarely yield to any single intervention, and almost never to the government or the private sector acting in isolation. Unlike government agencies constrained by politics, or businesses constrained by profit, mission-driven philanthropic organizations can convene unlikely partners around shared goals of prosperity, stability, and community health, and invest across multiple interconnected levers simultaneously.

This is what that collaboration looks like in action.

The Challenge | Court-Enforced Debt in Hamilton County, TN 2026

Solutions & Results When CFGC began the long-term work to change systems that create opportunities or barriers to economic mobility, we understood that we could not do it alone. That type of work requires trusted partnerships, deep collaborations, and relationships that are built person-to-person but have institutional staying power. The judges with whom we have worked on this issue have spent years closely witnessing how the system worked, who it advantaged and disadvantaged, and how those outcomes compounded over time across our community. They were and continue to be advocates for innovation —working to improve systems that will outlast their tenure on the bench. Their thoughtful partnership was crucial, both early in our research and throughout the process of designing and delivering a number of interventions which continue to show great promise.

LEGISLATIVE SOLUTIONS Between 2022 and 2026, the CFGC’s partnership with the courts and Pew produced several significant innovations, reforms, and changes in policy. The first of these was new legislation. In the spring of 2024, the Tennessee General Assembly passed SB 2375/HB 2320 unanimously in both chambers. Governor Bill Lee signed it into law on May 3, 2024. Sponsored in the Senate by Senator Bo Watson (R-Hixson) and in the House by Representative Patsy Hazlewood (R-Signal Mountain), the new law directly addresses one of the most consequential information gaps identified in CFGC's research: by 2022, third-party debt buyers were filing more than half of all debt collection cases in Hamilton County's General Sessions Court. These entities did not have to provide defendants with any information about when or how they obtained the debt from the original creditor, nor were they required to present the judge with documents verifying the legitimacy of the debt or their ability to sue for it. Under the new law, any third-party debt buyer or other nonoriginal holder of a debt filing a consumer debt action in General Sessions Court

To ensure that this new law is put into practice locally, the Hamilton County General Sessions Courts updated their local court rules to require the use of a Non-Original Creditor Consumer Debt Civil Case Coversheet. This local rule requires the use of a standard or equivalent form that meets the requirements of the new law in providing the history of the debt ownership. This coversheet is intended to be submitted with the original filing and also be included with the summons to the defendant to further clarify the origin of the case. Prior to this law, a consumer served with a civil summons might not recognize the party who was suing them, or know why, or whether the debt being claimed was valid. This legislation makes it easier for a person to follow the thread between a debt they may have incurred with a wellknown credit card company to the obscure third-party plaintiff who purchased the debt after the account was turned over for collections. Even when an individual may have a full understanding that they were the subject of a lawsuit and why, engaging with the courts to find a resolution frequently costs more time and money than most people have to spare. In those instances when defendants don’t come to court, requiring that the plaintiff present information they are already federally required to have provides the judge with the information needed to verify the debt.

Solutions & Results | Court-Enforced Debt in Hamilton County, TN 2026

must now provide a statement that the debt has been transferred, the date of that transfer, the names of any prior holders of the debt since the debt originated, and the name or a description of the original creditor. Before a default judgment can be entered, the plaintiff must also present to the judge documentation that demonstrates both their authority to collect the debt and the actual existence of the debt, such as an agreement signed by the consumer or a record of payment.

Greater transparency saves courts, plaintiffs, and defendants resources. This legislation takes a meaningful step toward increasing transparency and fairness in debt collection processes.

LOCAL SOLUTIONS Another category of reforms focuses on closing the persistent information gaps that disadvantage defendants, make collection of debt more difficult for plaintiffs, and clog up courtrooms. Following the passage of SB 2375/HB 2320, CFGC, Pew, and Hamilton County Courts personnel collaborated to create informational Court notices.

These one-page documents are written in plain language, have a clean layout with clear headers, and include information about free legal resources, including Legal Aid of East Tennessee (see Fig. 2, page 17). They are now required, by local rule, to be served to defendants alongside civil summonses, also revised by the Court to improve clarity. Research by Texas Appleseed6 shows that 83% of defendants who received a plain-language resource packet reported improved understanding of their lawsuit, and 86% said they were more likely to respond. These new documents have also been added to the Hamilton County court website to improve accessibility outside the courthouse. Process server training has been introduced alongside an updated Affidavit of Return of Service form, which requests more detailed documentation of how and where service was completed. Active efforts are also forthcoming to raise consumer awareness of two rarely-used protections that already exist under Tennessee law: a $10,000 "wild card" exemption that shields personal property (including bank account funds) from garnishment and the Slow Pay Motion, which allows defendants to repay a judgment in manageable installments without facing garnishment. The wild card exemption is only used in about 1% of eligible cases, and the Slow Pay Motion is exercised in only 5% of cases where a judgment is entered. Notably, the $10,000 selective exemption is generous when compared to neighboring states with exemptions from $200 in Arkansas to $1,200 in Georgia and a matching $10,000 in Mississippi, though it includes burdensome requirements to claim and few defendants use it.

ADMINISTRATIVE SOLUTIONS As this work has progressed, one challenge has become especially clear: the current court data systems were built to track individual cases, not to show year‑over‑year trends or broader patterns. Without reliable and standardized data, it remains extremely difficult to measure the impact of any intervention or to make an evidence‑based case for additional reforms. Fortunately, updates are being implemented within the Hamilton County court system, creating a stronger foundation for understanding what’s working and where more improvements are possible.

NEW NOTICE

Fig. 2

Fig. 1

AS OF OCT. 2025

Systems change is large in impact—and it is built in the small details. In our continued conversations with the Civil Judges, they expressed the desire for an administrative partner that would support system innovations. The judges had the desire to innovate—but not the time, and there was no one dedicated to the Civil Sessions Court to support the implementation of new processes to improve court service and outcomes. The judges realized this type of process steward was necessary to help build a system that would outlast their tenure on the bench. The new Civil Court Coordinator position—funded for two years by the Community Foundation of Greater Chattanooga—is supporting the Hamilton County Civil Sessions Court by implementing new practices and improving data collection for real-time tracking of effects and long-term analysis of outcomes. The Coordinator focuses on creating and standardizing data collection practices, looking for ways to improve coding of debt buyer cases for tracking purposes, and creating systems to record case outcomes in ways that the court had not previously been able to do at scale. By building that capacity from within the court system itself, the Coordinator role positions Hamilton County to become a national model for data-driven court modernization. This additional capacity has supported another set of reforms addressing the often-missed first scheduled court hearing. Our interviews in 2022 and 2023 demonstrated that many defendants who miss their first court appearance do so not out of indifference, but because of the same barriers that resulted in financially precarious situations in the first place: inflexible work schedules, lack of transportation, childcare constraints, or simple confusion about what the summons requires of them. Previously, when a defendant missed the designated court date and a default judgment was issued in favor of the plaintiff, no notice was sent from the court to inform the defendant they had a judgment against them. In this system, the plaintiff was also required to spend additional resources in their effort to collect on the judgment. The new Default Damages Docket is designed to increase the ability of plaintiffs and defendants to engage in their case and potentially reach an agreement that puts both parties in a better position than if a default had been issued. Now, when defendants miss the initial court appearance for a debt collection case, the new protocol initiates active

Early results are promising. From the start of the program in summer 2025 through the first half of 2026, of 2,988 cases processed through the docket, 19.5% of defendants responded to outreach and appeared. As a result, 584 default judgments were avoided, and 336 negotiated agreements were reached. These seminal data underscore the opportunity that accessible and transparent court proceedings provide for community members. In practical terms, those numbers represent hundreds of families who retained the ability to engage with their debt, potentially protect their wages and bank accounts, and avoid the cascading financial damage of a default judgment.

July 2025 - June 2026

584

default judgments avoided

336

negotiated agreements reached

Solutions & Results | Court-Enforced Debt in Hamilton County, TN 2026

outreach. Defendants receive both a phone call and a mailed notice informing them that their case will be heard in a default damages docket. A complementary text message reminder system, implemented in December 2025, adds a two-touch notification approach—reaching defendants five days before their hearing and again the day before.

...those numbers represent hundreds of families who retained the ability to engage with their debt, potentially protect their wages and bank accounts, and avoid the cascading financial damage of a default judgment.

The Work Ahead Our partnership with Hamilton County General Sessions (Civil) Court and Pew has led to a set of reforms that represent meaningful progress, but these are merely the beginning. The journey began with a comprehensive review of the data on court-ordered debt collection and its impact on Hamilton County’s families. To expand this progress, additional data will be required. The Civil Court Coordinator role is central to this work. The Coordinator creates systems, leads data collection, documents processes, and incorporates those processes into their day-to-day work as well as the daily functioning of the court—helping ensure that innovations will outlast any one person. As standardized data collection matures and case-level tracking becomes more reliable, Hamilton County will be positioned to evaluate which interventions are producing the most significant increases in efficiency and reductions in default judgments, debilitating garnishments, and downstream financial harm— and which require further refinement. That evidence base will also be essential for determining which of these reforms may be replicable outside of Hamilton County. Tennessee has 95 counties, each with its own local political conditions and external partners. A rigorous, well-documented local model that demonstrates measurable improvements regarding consumer protection and court efficiency will accelerate a statewide conversation about modernizing our courts that may not otherwise take place. Consider, for example, the 19.5% attendance rate at the Default Damages Docket and the tremendous opportunity this presents for both parties to reconcile their court case to a mutually positive outcome. While other courts utilize this sort of “second chance” docket, the Hamilton County Civil Sessions court appears to be first in collecting baseline data for understanding the impact of this particular modernization effort. We see several additional process improvements that may be achievable by working with our courts.

One of the most straightforward improvements is the systematic coding of case types as a distinct category in court records. Based on the data from 2016-2022, third-party debt buyers file the majority of cases in Hamilton County's General Sessions Court, yet they have historically been difficult to track as a discrete category. Requiring plaintiffs to identify not just the nature of their claim but the type of debt at issue, such as distinguishing medical debt from credit card debt or payday loans from retail purchases, adds another layer of information and a more honest public accounting of what is driving the volume of civil debt litigation. In a system where data has historically been scarce, they are the raw material from which evidence-based reform is built.

Verifying Service

Courts currently receive limited information to verify that service (notice to the defendant named in the lawsuit) was properly completed, meaning that some default judgments can be—and likely have been— entered against defendants who never received notice of the lawsuit at all. The United States Supreme Court has held in Peralta v. Heights Medical Center, Inc. a judgment entered without proper service is void, and yet the current system provides courts with few tools to verify that the standard has been met. Hamilton County's judiciary has established formal process server training requirements, which numerous other states and jurisdictions have already implemented in various forms. Standardized training, combined with more rigorous documentation requirements, would significantly reduce the risk that a defendant's first awareness of a judgment against them comes in the form of garnished wages or a frozen bank account.

Increased Education

The Work Ahead | Court-Enforced Debt in Hamilton County, TN 2026

Systematic Coding

Expanding consumer awareness of existing legal protections— particularly the $10,000 wild card exemption and the Slow Pay Motion— requires more than redesigned court forms. Resource packets, court website improvements, and plain-language notices are necessary components of a thorough outreach strategy. They are most effective when reinforced by human contact, be that through legal aid referrals, community organizations, or well-trained community advocates who can direct defendants toward the information they need. Raising the utilization rate of both the wild card exemption and the Slow Pay Motion would be one of the highest-impact, lowest-cost improvements the system could achieve.

When a garnishment has been ordered, a problematic gap exists between what federal and state law protects in theory and what it protects in practice. This disparity is a clear example of stagnant processes that haven’t kept up with other modernizations. Federal wage garnishment limits were passed in 1970, long before the time of common use of direct deposits. Tennessee law limits wage garnishment to this federally set 25% of a defendant's disposable earnings minus $2.50 per week per dependent under age 16 – but that protection does not automatically extend to bank accounts. When a creditor places a levy on a defendant's bank account, wages that have already been deposited can be seized in their entirety. The result is that a working family can simultaneously be subject to a 25% wage garnishment and a full bank account levy, effectively leaving them with no resources to cover their rent, food, utilities, or other critical household expenses. This situation obviously falls hardest on those households least able to withstand the shock.

Policy Change

The most promising legislative remedy is the creation of an automatic minimum bank‑account protection—a built‑in safeguard that preserves a baseline amount of money for essential needs such as rent, utilities, and groceries without requiring the defendant to file paperwork or even necessarily know the protection exists. Several states already have automatic protections ranging from $400 to $5,000. A broader review of Tennessee's personal property exemption framework is also warranted, including an evaluation of whether the $10,000 “wild card” exemption could be restructured to apply automatically in the bank account context. Taken together, these policy changes would not prevent creditors from lawfully collecting legitimate debts, but they would help ensure that collection does not compromise a person’s ability to remain housed or employed. There is a balance between transparency, justice, and efficiency that the court system should be designed to strike. Achieving it will require the same combination of rigorous research, sustained advocacy, and cross-sector partnership that has driven every reform described in this report.

The challenges that we encountered when we began this process are not unique to Hamilton County, or even Tennessee. The lessons we have learned from this work over the past few years will not only make our continued work in our community more effective, but they will also open the possibility of this work scaling and transferring to other communities that are similarly focused on how a fair and transparent court system can promote economic mobility:

INTERCONNECTEDNESS

It is useful to think of the civil debt collection process as a pipeline: if the pressure builds at one end and you patch only the nearest crack, the problem simply moves downstream. Default judgments, garnishments, and the havoc they could wreak on a family’s stability were not isolated failures but predictable and cumulative outcomes of gaps in a process that compounded at every stage. It is impossible to fix one part of a system without understanding the whole.

FAIRNESS

Lessons Learned | Court-Enforced Debt in Hamilton County, TN 2026

Lessons Learned

Fairness means more than how the rules are written down. Fairness is a function of how well people understand, can follow, and utilize those rules in a practical context. Our research found a civil debt collection system that was fair in theory and essentially inaccessible in practice: summonses that provided little guidance, lack of plain-language explanation of rights, and available protections that were rarely used by the people who needed them the most. Making a system more fair is not achieved simply by making information more available; it must be clear and useful. Put another way, systems should be designed as if the people who depend on them have never encountered them before.

COLLABORATION

This report documents a series of interventions. Some of the interventions we discuss in this report were quite modest—adding a plain-language court form, for example—while others, like passing a new state law, were truly substantial. Each of them required months of close collaboration with numerous partners inside and outside of government, from recently elected leaders to professional and dedicated civil servants who have been in their roles for years. Effective collaboration required us to do more than offer up ideas, no matter how grounded they were in research and good intentions. It also required us to listen to ideas that were offered and identify the unique ways that we could support those ideas.

Collaboration is a product of trust, which takes time. This work invited us to build new relationships rooted in respect and curiosity. These relationships not only made this work possible, they made it more enjoyable by orders of magnitude.

References 1. United for ALICE. (2025) The State of ALICE in Tennessee. https:/www.unitedforalice.org/introducing-ALICE/tennessee 2. ThinkTennessee. (2025). State of our state dashboard. https://www.thinktennessee.org/state-of-our-state/ 3. Boyd Center for Business and Economic Research. (2025, March). Tennessee financial wellness assessment. University of Tennessee, Knoxville. https://treasury.tn.gov/ Portals/0/ Documents/TNFLC/Tennessee _Financial_Wellness_Assessment.pdf 4. https://www.census.gov/programs-surveys/acs/data.html 5. Community Foundation of Greater Chattanooga & The Pew Charitable Trusts. (2023). The Impact of Debt Collection Lawsuits in Hamilton County, TN. https://www.cfgc.org/strategic-initiatives 6. https://www.texasappleseed.org/sites/default/files/202405/debt_collection_report_2023.pdf