Massachusetts Toughens Rules for Small Claims Collection Lawsuits
The Massachusetts Supreme Judicial Court announced last week that it has changed some of the rules governing the use of small claims courts. The Court said that the changes were made specifically to address the volume of debt collection cases that are filed in small claims courts.
The rules changes come on the recommendation of the Small Claims Working Group, a panel of legal experts that was convened in 2006 to “examine and improve current small claims practices.” The Working Group was created, in large part, in response to a series of articles that appeared in the Boston Globe chronicling the perceived imbalance of debtors and collection law firms in small claims courts, which allow cases with remedies of up to $2,000.
In a press release detailing the changes, the Supreme Judicial Court (SJC) noted that “While the rules [changes] apply to all small claims matters, there will be a major impact on debt collection cases.” The changes address many of the issues identified by the Working Group in collection cases, and four in particular: increased certainty of service, insufficiently detailed claims, increased scrutiny of default judgments, and notice to the court when a judgment is paid.
Adam Olshan, an attorney with Law Offices, Howard Lee Schiff, P.C. in Worcester, Mass., agrees that collection law firms will be affected, some more than others. “This will impact the high-volume collection law firms,” he told insideARM.
According to the new rules, creditors filing a small claim arising out of their trade or commerce or who are collecting an assigned debt must certify that they have verified the defendant’s current address in one of several specified ways. If the plaintiff fails to verify the address, the court may not enter a default judgment if the defendant later fails to appear for trial.
The changes also add increased scrutiny to default judgments that are entered. They introduce a checklist for magistrates and judges of the specific factors that the law requires to be satisfied before entering a default judgment.
I think that our government has lost the focus on who is in the wrong. Most of the debtors being sued are just refusing to pay and the only way to get paid is to file a judgement. Everyone is making the debt collector out to be the bad guy when the FACT is that the debtor used the money that was loaned to them and when it comes time to pay it back, they suddenly become the victim of the “big bad banks”.
But the banks were great when they were flaunting that Visa in a store or bar.
What the Globe’s Spotlight articles uncovered was the less-than-arms-length relationship between the Court and the collection attorney. Another example of this conflict of interest was the relationship between NAF an one of the nation’s largest debt collection law firms.
The courts should never be less than a neutral arbiter.
It is time for the collections industry to stop whining and start conducting in a legal and business-like fashion.
Any changes to the collections laws to continue to address the industry’s abuses have been earn by years of unacceptable practice.
I couldn’t agree with JN more!! We service one of the largest Debt Buyers in the nation and they REFUSE to stop the interest when a customer is paying!! This practice should be illegal. And I understand the customers frustration. Why keep paying when the balance is only going up? Then they stop paying altogether and we get the ole, “sue me then” response. This is an area that the lawmakers need to focus on. Not small claims court.
Spud, you may have misread Mr. Lunsford’s article.
The changes he relates are in the rules and guidelines of the Court in the civil proceedings within their jurisdiction.
The laws have not changed.
Many states, including Massachusetts, have statutes in place that prohibit the the charging of interest and fees that are not allowed by contract, and permit additional fees/interest/etc. ONLY by permission of the Court.
Many collectors and collection attorneys ignore these statutes and to continue to attempt to collect fees and interest to which they are not entitled.
It seems that the very laws you recommend are already being ignored by the industry.
How would YOU characterize that?