State Lawmakers Take Closer Look At Aggressive "Debt Buyer" Practices; NC Statute Takes "Produce The Note" Approach When Filing Collection Suits

The Associated Press reports:

• With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money. [...] Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit. [...] Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paid.

***

• A North Carolina law that took effect this month requires debt buyers filing collection lawsuits to produce documents proving they're the ones owed the money. Trying to collect on a debt that a company should reasonably know is invalid could lead to lawsuits and civil penalties of up to $4,000 per violation. North Carolina Attorney General Roy Cooper cites the case of a 65-year-old woman who had been plagued by up to five collection calls a day until her lawyer demanded proof she owed the money, then learned collectors were looking for a debtor in Greensboro, about 140 miles to the west. "We've gotten a lot of cases that the debt is not owed or the debt has been paid off," Cooper said. "They call and they browbeat people to pay money that they don't even owe."

***

• A New York City ordinance passed last spring requires similar proof from debt collectors, forcing them to tell consumers what company they represent, the original creditor, and the amount of the debt they owe. "Anyone contacted by a debt collection agency will now be empowered to demand written documentation regarding the status and history of the debt," Mayor Michael Bloomberg said.

For more, see States Raise Limits On Creditors As Debtors Squirm (Financial Misery Prompts States To Pass New Protections Against Aggressive Debt Collectors). zombie debt