Ward Benshoof, partner in the Environment, Land Use & Natural Resources Group, was handling a post-judgment debt collection case two years ago when he learned evidence seemed to have little substance.
One of the country’s largest debt buyers was pursuing his pro bono client with such vigor that she felt compelled to pawn her wedding ring to settle a default judgment against her in Los Angeles County Superior Court.
After arranging a settlement between his client and the debt buyer, Benshoof was curious and called the bank that originated the loan and sold the debt, but the bank had no record of the debt.
“It was one of several eye-opening experiences for me in the case,” Benshoof says. “I felt naive. How could the court have entered a judgment?”
The only evidence in discovery was a spreadsheet with his client’s name and some dollar figures. A clerk processed the creditor’s claim on the document, noted that she had been served with a suit and then entered judgment after it went unchallenged. No judge had reviewed the lawsuit.
Benshoof has notified some courts of his unscientific study of Alston & Bird’s dockets: when filing complaints, debt buyers aren’t disclosing when the debt was purchased, thus possibly triggering the Fair Debt Buying Practices Act’s more rigorous scrutiny.
“We also believe that clerks still are processing default judgments and they shouldn’t be because there is still too much reliance on affidavits and not enough information disclosed,” Benshoof said. The law’s more comprehensive and detailed requirements for proof would go unmet if that happens, he explained, adding that he believes the law’s attempt to get beyond the old common-law book-of-accounts standard requires judicial determinations.
Benshoof’s solution: a checklist that would serve as an alternative to full implementation of the act’s comprehensive scope, thereby relieving judges of the increased workload that judicial determinations would entail. The checklist includes facts, based on requirements in the statute that clerks could use to winnow cases filed by debt buyers without exceeding their administrative function and encroaching on a judicial one.
The checklist would ask debt buyers a series of questions that otherwise would require a judge’s review. The questions would help ascertain the validity of a balance charge-off, along with an accounting of any fees or interest; date of default or last payment; charge-off creditor’s name and address and the account number; names and addresses of all previous purchasers of the debt; and attachment of the original contract or similar evidence of the consumer’s agreement to the debt.
“I’ve gotten good feedback from some judges,” Benshoof says.
In 2014, New York adopted the Unified Court System Rules, which require debt buyers filing lawsuits to provide affidavits from original creditors and all subsequent buyers and attach copies of key documents.
Benshoof, who has reviewed New York’s new procedures and checklist, said he believes a deeper-diving checklist is needed.
“Clerks aren’t trained in evaluating evidence. Judges are.”
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