Legal advocates said changes in court rules that Missouri Attorney General Chris Koster proposed to a Missouri Supreme Court commission would improve accountability in debt collection and hamper abusive practices that exploit the legal system to prey upon consumers who don’t know the law or can’t afford legal counsel.
“These changes in the court rules would create important accountability in the practice of debt collection,” Dan Glazier, executive director of Legal Services of Eastern Missouri, said at a press conference held at the attorney general’s office in downtown St. Louis on Thursday, December 3. “These are major steps toward stopping abusive practices that send people spiraling into poverty and homelessness.”
Koster proposed that the Missouri Supreme Court make three changes in total to two of its rules.
One change would require debt collectors to produce documentary proof at the outset of litigation establishing their right to pursue collection of the debt in question. Glazier said many debt collectors are now successfully filing “frivolous lawsuits” and collecting on debt to which they are not legally entitled. In many cases, Koster and Glazier said, suits are filed to collect debt that has expired due to the statute of limitations.
“These are often elderly people who are unrepresented by an attorney and who don’t understand the statute of limitations,” Glazier said. “These cases should not be in court.”
Another change would limit the circumstances in which a default judgment could be granted. This would preclude debt buyers from manipulating court procedures with stalling tactics in which they repeatedly request consumers to appear in court, hoping to obtain a default judgment when the consumer misses a court date.
“That’s huge,” said Rob Swearingen, an attorney with Legal Services, after describing how his clients currently risk losing their jobs to attend a series of court appearances where the debt collector requested a continuance.
A third change would require that creditors’ attorneys attest that the fees they seek to recover in the court settlement were contractually authorized, necessary and actually performed to recover on the debt, and that costs claimed were legitimate.
Swearingen said he has seen cases where debt collectors filed to recover “$100 a minute” for attorney fees when they won a suit by default. “This proposal would eliminate this type of abuse.” The new rules, Glazier said, require that creditors be “held accountable for their attorney fees.”
Koster proposed these changes in a nine-page letter, with more detailed enclosures, to the court’s newly created Commission on Racial and Ethnic Fairness. Commission co-chairs are William R. Bay, a partner at Thompson Coburn; Michael A. Middleton, interim president of the University of Missouri – Columbia; and Judge Lisa White Hardwick of the Missouri Court of Appeals, Western District (who recently cast the deciding vote, in a special appointment to the Supreme Court, to vacate Reginald Clemons’ conviction and death sentence).
At the press event, Koster said he had not yet had any discussion about his proposal with members of the court.
A spokesperson for the Missouri Supreme Court told The American that Koster’s proposals had been received and that the commission and court would take them seriously.
Koster also announced that his office had filed new proposed consumer protection regulations to target similar types of abuse in the industry. Those regulations would deem it unlawful to file suits on time-barred debt or to try and trick a consumer into unwittingly reaffirming a debt – what Glazier referred to as “zombie debt.” Enforcement actions for violating the rules could include criminal lawsuits or civil suits brought by the Attorney General’s Office or private counsel.
In his remarks on December 3, Koster quoted from a recent ProPublica report on debt collection practices in St. Louis that was reprinted by The American and the Post-Dispatch. He also said his proposals answer a call to action in the Ferguson Commission report. Koster noted ProPublica’s findings that these litigation abuses disproportionately target African Americans.
“These are very powerful changes on behalf of consumers,” Swearingen said. “These will make a huge difference for working and poor people.”
Koster emphasized that his proposed changes are legally conservative and would not interfere with legal collection of legitimate debt.
“Legal debt should be repaid,” Koster said, “and these changes would not impair those efforts.”
If the Supreme Court waits for its Commission on Racial and Ethnic Fairness’s report to consider these changes, there will be a long wait. The commission was ordered to file its initial report by June 1, 2016 and annual reports by January 1 thereafter.
Missourians who believe they have been subjected to unfair debt-collection practices should contact the Attorney General’s Consumer Protection Hotline at 800-392-8222 or file a complaint online at ago.mo.gov.
