Legislation: more restrictions on debt buyers

Debt buyers would have to supply more evidence when filing claims against Minnesota consumers under legislation being introduced this week, Attorney General Lori Swanson said Monday.

The legislation targets debt buyers — companies that buy debt from credit card companies and banks and then try to collect on it. Swanson explained the bill during a news conference with Sen. Ron Latz, DFL-St. Louis Park, and Rep. Debra Hilstrom, DFL-Brooklyn Center.

The bill aims to change a system in which the collectors target thousands of Minnesota consumers each year in lawsuits and obtain judgments against them, often without the consumer's knowledge, Swanson said.

The state recently settled a lawsuit with one such company, Midland, which Swanson had accused of going after the wrong people and "robo-signing" affidavits in order to obtain the judgments. Subsequent investigations by the attorney general's office showed the evidence is often questionable, she said.

"Even the original creditors admit they can't vouch for the integrity of the data," Swanson said.

The bill adds restrictions to debt buyers as they file claims in conciliation court against consumers. Under the legislation, the debt buyer must:

• Provide a copy of contract between the debtor and the original creditor

• Provide admissible evidence establishing that the person owes the money

• Provide admissible evidence establishing that the amount claimed is accurate

• Provide documentation that shows how the debt buyer came to own the debt, if they are not the original owner

• Proof that the lawsuit was served on the consumer and proof that he or she was notified of the court hearing

"Essentially the bill tells debt buyers: You need to prove your case to win your case, and it's as simple as that," Swanson said.

Latz said the legislation should cut down on the number of debt collection lawsuits in conciliation court, which he said have overwhelmed the state's court system.

Often, the consumer doesn't even know about the lawsuit.

"And so the whole process of debt collection counts on the consumers not knowing or not caring or not having the resources to hold them to their proof when you get into conciliation court, which is where most of these claims are brought — small claims court," Latz said. "And as it is, resources are tight in the justice system, so all around, you end up with people being victimized."

Besides Latz and Hilstrom, Republican Rep. Jim Abeler of Anoka said he also supports the legislation.

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