Do you like seeing itemized charges if you’re paying a debt collector? Do you like not being sued to pay off other peoples’ debt?
Of course we all do, which is why in 2009, legislation was passed to protect consumers from debt collectors suing them for debt without valid evidence that the debt exists, and without proving they are suing the right person for the right debt.
But a bill in the Senate sponsored by Sen. Mike Lee, R-New Hanover, would roll back the 2009 reform that prevents abusive debt collection in North Carolina. A version of that bill, Senate Bill 511
, passed a Senate Judiciary Committee Tuesday morning.
Around 2004, the state’s courts started seeing a flood of lawsuits brought by debt collectors against the wrong people, with little evidence that that these people owed the debt. People who couldn’t afford an attorney ended up in default. The 2009 legislation was meant to protect these North Carolina consumers.
The reasoning behind Lee’s bill appears to be that debt collectors (who buy off debt from businesses, banks, hospitals etc.) don’t want to pay extra for documents itemizing the debt they purchase. Lee doesn’t see fraudulent lawsuits as a problem.
“If a lawsuit against you says you owe money, you have the right to say I need itemized business records,” he told the committee. “The debtor has to come to court and respond. Misidentifications occur, you can’t craft rules against exceptions.”
Sen. Gladys Robinson, D-Guilford, defended the average consumer.
“A lot of people are illiterate about financial practices,” she said. “They don’t know they can advocate for themselves, so this is denying information to those folk. You can’t refute a charge if you don’t know what it is and they don’t know to ask for this information. You are saying, ‘get a lawyer to refute things,’ but that’s not a general practice in a lot of our community.”
A spokesperson from the Consumer Protection Division of the North Carolina Department of Justice praised the 2009 reform.
“The General Assembly had the foresight to pass a good law that protects consumers,” he said. “States that haven’t passed laws like this are still having problems. The North Carolina law has been looked at as a model.”
For example, according to a report
in the Washington Post, a review of court filings in five Northern Virginia districts found of 16,000 cases filed by one debt collector company, 9,000 got default. In many cases, the consumers didn’t know what had happened until the sheriff showed up and tried to repossess their house or car.
Statistics from North Carolina’s Center for Responsible Lending
show that abusive debt collection is the top consumer complaint made by seniors, military and veteran families to the federal Consumer Financial Protection Bureau. 36 percent of debt collection complaints from all consumers, 41 percent of complaints for all veterans and military families and 48 percent of complaints for all seniors relate to continued attempts to collect debt that is not actually owed.