New Legislation for Collection Agencies

On January 14 the Attorney General of Minnesota, Lori Swanson, called for legislation to force companies who buy bad debts (in other words, collection agencies), to demonstrate in court that their information is reliable, when it’s used to target debtors for repayment. The Attorney General argued that debt-collection companies buying old, unpaid debts from banks and credit card companies (for pennies on the dollar) frequently obtain default court judgments against the debtors by using information that is incorrect and incomplete.Debtors don’t receive adequate notice of court proceedings against them, or don’t have the resources to represent themselves in court, so judges often grant default judgments based on summary (and not always legitimate data) provided by the debt buyers. “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.”The Attorney General is backing a bill, sponsored by the chairs of the House and Senate judiciary committees, that would make all debt buyers establish evidence of the validity and amount of the debt, and establish the correct debtor is being targeted and that they properly own the debt in question. Another reason the legislation is necessary is that debt buyers can afford better legal representation than debtors, Swanson said, and added that a lot of times, debtors aren’t notified about legal proceedings until far too late, because the buyers fail to properly notify them—old addresses, misspelled names and other unforeseen circumstances are often to blame.And, debt buyers are filing a huge number of lawsuits, overburdening the court system. Midland Funding LLC has filed more than 15,000 lawsuits against individuals in Minnesota courts since 2008; last December the company settled a lawsuit with the state of Minnesota, which was brought by Swanson’s office. Midland agreed to change its business practices; it had been filing unreliable court papers and carelessly pursuing people for debts not actually owed. The company’s employees swore testimony revealing they signed up to 400 mass-produced affidavits, daily—and frequently they did not read them, know what they contained, or verify if the information was accurate or not.If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too.