A debt buyer who purchases consumer debt may be required to provide certain evidence when seeking a default judgment from a conciliation or district court.
In addition to an application for judgment, HF80 would require that six items be provided to a court:
- terms of the original contract, such as a copy of the written contract between the debtor and original creditor;
- evidence that the defendant owes the debt;
- evidence that the amount claimed to be owed is accurate, including an itemized breakdown of the balance, fees and interest;
- a valid and complete chain of debt assignment;
- proof that the party seeking the judgment used reasonable efforts to provide the court with the correct address for the debtor; and
- notice to the debtor of the motion and hearing.
Rep. Debra Hilstrom (DFL-Brooklyn Center), the bill’s sponsor, said the intent is to make sure the person seeking the default judgment actually owns the debt; that they have the right person; and they have the accurate amount of debt that is owed.
Passed 131-0 by the House Tuesday, the bill now goes to the Senate where it is sponsored by Sen. Ron Latz (DFL-St. Louis Park).
Deputy Attorney General Nathan Brennaman told the House Judiciary Finance and Policy Committee in January that he hopes the bill would prevent cases like that of a woman that had to spend $2,000 in legal fees to prove to a debt buyer that a debt was not hers; or a man who had to fight a default judgment against him because a debt buyer was looking for someone else with the same name.
When purchasing debt, Brennaman said, debt buyers often get limited information about a specific debt which is often bundled into portfolios with thousands of debts.