Debt Buyer Bills Backed by AG Swanson Introduced in Minnesota

Twin bills were introduced Monday in Minnesota’s House and Senate that would place certain requirements on debt buyers that seek default judgments in debt collection lawsuits.

Minnesota Attorney General Lori Swanson praised the bills yesterday in giving them her endorsement, noting that debt buyers should have to “prove their case in court.”

The bills – HF 80 and SF 33 – are sponsored by the Chairs of each chamber’s Judiciary Committee.  The description of the bills, as written in the text, is “Relating to judgements; specifying certain requirements relating to assigned consumer debt default judgements.”

The proposals would require entities seeking default judgments on assigned consumer debt – defined in Minnesota as purchased debt – to provide certain documentation to the court before a judge can enter a default judgment.

Swanson noted Monday that debt buyers often can afford better legal representation than consumers in court proceedings and that consumers are not always notified of cases until after judgment is passed. Part of the new requirements involve proof of service to consumers.

“A debt buyer should have admissible evidence,” Swanson said. “In our American court system, to win in court, you should have to prove your case in court.”

Swanson has long battled debt buyers’ use of the court system in Minnesota, most recently wrapping up long-running regulatory action against Encore Capital Group.

The bills would require debt buyers to submit to the court, addition to the application for judgment,:

(1)    a copy of the written contract between the debtor and original creditor or, if there was no written contract, other admissible evidence establishing the terms of the contract between the debtor and the original creditor, including the moving party’s entitlement to the amounts described in clause (3);

(2)     admissible evidence establishing that the defendant owes the debt;

(3)    admissible evidence establishing that the amount claimed to be owed is accurate, including an itemization of the balance owed at the time the debt was first assigned to another party by the original creditor and a breakdown of post-assignment fees, interest, and interest rates;

(4)     documentation establishing a valid and complete chain of assignment of the debt from the original creditor to the moving party, including documentation or a bill of sale evidencing the assignment with proof that the particular debt at issue was included in the assignment referenced in the documentation or bill of sale;

(5)    proof that a summons and complaint were properly served on the debtor and that the debtor did not serve a timely answer; and

(6)    proof that the debtor was provided notice of the default judgment motion and hearing.

The bills were introduced and read in the House and Senate Monday and were placed in each chamber’s Judiciary Committee for further action.