Bills Introduced in State Legislature Target Debt Buyers

A bill introduced last week in the Minnesota House of Representatives — and its companion bill in the Senate — specifically target debt buyers, placing new guidelines on the collection activity of purchased debt and the verification process used by accounts receivable management firms.

The bills, HF2996 proposed by Rep. Joe Mullery of Minneapolis and SF2689 authored by Sen. Ron Latz of St. Louis Park, would require debt buyers filing collection lawsuits to produce an assortment of documents proving that borrowers being sued actually owe the unpaid debts.

ARM industry trade association ACA International said last week in an email to its members that the documents to be required include “notice to a consumer 30 days before filing suit, a complete chain of title and other information about the debt, and a list of information when seeking default judgment if a consumer does not respond to the complaint.” The proposals also tackle the issue of “re-aging” debt, or restarting the Statute of Limitations clock after a payment has been made.

The bills call for increased penalties for violating any part of the new law. Failure to attach the new required documents would result in a $2,500 civil penalty. Filing a false affidavit in relation to a purchased debt would garner a $5,000 penalty.

ACA also noted that it, along with other ARM groups — Minnesota Association of Collectors (MAC), DBA International, and the National Association of Retail Collection Attorneys (NARCA) – have been aware of the legislation and are working together to craft a strong response.

Both bills, introduced last week in their respective chambers, have been referred to committee: the House bill is now before the Civil Justice Committee and its companion bill is before the Senate Judiciary Committee.

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