Missouri Attorney General Chris Koster on Thursday called for changes to state court rules to help stop abusive debt collection.
In a letter to the Missouri Supreme Court’s recently formed Commission on Racial and Ethnic Fairness, Koster called for rule changes that would:
• Require debt-buying companies to prove before filing suit that they own the debt and the statute of limitations on collecting the debt has not expired.
• Preclude companies from using tactics in which they repeatedly request consumers to appear in court, hoping to obtain a default judgment the first time the consumer misses court.
• Strengthen the proof those companies need to recover attorney fees and litigation costs by requiring their attorneys to attest that those fees were necessary.
Koster said Missouri has seen a dramatic increase in debt-collection litigation. Many companies buy charged-off debt, or debt that has been deemed uncollectible by a creditor, at a steep discount and then attempt to collect the debt through any means possible.
Federal Trade Commission data indicates that 94 percent of these debts are sold without any documentation that they are actually owed.
He said that often leads to “serial filing” of debt-collection lawsuits in state court. Before filing the suits, many of the debt buyers fail to substantiate whether a debt is owed or in what amount.
He cited a story published in the Post-Dispatch by the nonprofit journalism group ProPublica that showed the litigation abuses disproportionately affect racial minorities.
The Missouri Supreme Court established a racial and ethnic fairness commission in October. It is composed of lawyers and judges who will conduct a multiyear study of racial and ethnic fairness in the state’s judicial system.
St. louis Post-Dispatch
