Maryland Court of Appeals Amends Rules for Judgments on Affidavits Affecting Debt Collectors
On September 7, 2011, the Maryland Court of Appeals approved changes to Maryland’s Rules of Civil Procedure that will force debt collectors to provide extensive additional evidence to support their claims against consumers. This advisory describes those changes and the new requirements.
First, the rule changes require additional documents providing evidence of the underlying debt and its terms. A plaintiff asserting a claim for consumer debt that is not the original creditor is required to support its claim by attaching “a certified or otherwise properly authenticated photocopy” of at least one of the following documents to the affidavit:
- a document signed by the defendant evidencing the debt or the opening of the account;
- a bill or other record reflecting purchases, payments or other actual use of a credit card or account by the defendant; or
- an electronic printout or other documentation from the original creditor establishing the existence of the account and showing purchases, payments or other actual use of a credit card or account by the defendant.
In addition, a collector is required to itemize all money claimed, including principal, interest, finance charges, service charges, late fees, and other charges, a statement of the amount and date of the last transaction giving rise to the debt, and a statement of the amount and date of the last payment made on the debt. Affidavits also must contain the full name of the defendant as it appears on the account; the last four digits of the defendant’s social security number; the last four digits of the account number; and the nature of the transaction.
A plaintiff also is required to attach a copy of “a document evidencing the terms and conditions to which the consumer debt was subject,” if the debt was subject to such a document. There is an exception to this requirement in cases in which (1) the debt is an unpaid credit card balance; (2) the original creditor was a financial institution subject to regulation by the Federal Financial Examination Council; and (3) the claim does not include a request for attorneys’ fees or interest in excess of six percent. Many credit cards carry interest well in excess of six percent, and, thus, this carve-out may prove extremely limited.
Second, the new rules require documents showing that plaintiff owns the debt. Affidavits now must be accompanied by, among other documents:
- a chronological listing of all prior owners of the debt and the date of each transfer; and
- a copy of the bill of sale for each transfer in the chain of ownership.
Third, the new rules require that an affidavit include information on any charge-offs, including the date of the charge-off, the balance, an itemization of fees or charges, and an itemization of all post-charge-off payments and other credits.
In many instances these rules could make debt collection of assigned consumer debts more difficult if the debt collector does not have all of the underlying documents now necessary to assert the claim.
These new rules are mandatory for cases in which a defendant timely defends, and Maryland courts “may” require such proof even in cases of default judgment. Although the new rules leave the burden of proof in default judgment situations within the discretion of the particular court, for practical purposes, assignees should be prepared to meet the new evidentiary requirements regardless of whether they expect the debtors to defend the claims against them.
A copy of the order, which applies to all actions commenced on or after January 1, 2012, is attached here.
Troutman Sanders is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions, including debt collectors. Troutman Sanders’ Financial Services
Litigation Group has successfully litigated a wide array of individual and class action cases under the Fair Debt Collection Practices Act, as well as other federal and state consumer protection laws. In addition, Troutman Sanders’
CFPB Team monitors the development and activities of the Consumer Financial Protection Bureau on its
blog and also advises debt collectors on CFPB and Dodd-Frank issues.
Please do not hesitate to contact
David Anthony,
John Lynch,
Jon Hubbard or Nick Klaiber if you have any questions about this advisory.