Minnesota Needs Debt Buyer Regulation

Minnesota Representative Joe Mullery and Senator Ron Latz recently introduced a bill that would prevent debt buyers from filing a lawsuit without the ability to prove they have the right to collect a debt.

Why the need for the rule? Debt buyers and collectors file tens of thousands of lawsuits against Minnesota consumers every year, and probably serve at least as many that never get filed. But debt buyers should lose most of their lawsuits, if challenged.

Under current Minnesota law, debt buyers can get a judgment without any proof at all, if the defendant does not understand complicated court rules and Minnesota law. If the defendant consumer does not serve a written, formal answer in time, the debt collector can simply ask a court administrator to enter a default judgment. No judge ever sees the case.

The bill will require a debt buyer to provide documentation that a consumer owes a debt and that it has the right to collect a debt before it can sue. Debt buyers would also have to prove that the debt is not barred by the statute of limitations. They would have to provide an itemized accounting of the amount owed. Most importantly, the bill would give consumers the right to sue if a debt buyer does not follow the law.

The opposition arguments are predictable, but laughable. A representative of the debt collectors’ trade group, ACA International, said “this could have very significant implications as to the flow of credit to consumers.” This bill would force debt buyers to bring only legitimate collection lawsuits, and would stop them from bringing lawsuits where they cannot prove their case.

It sounds like the ACA is saying that creditors base their lending decisions on debt buyers’ ability to bring bad lawsuits.

Bill helps consumers against debt buyers | Star Tribune