An Act To Prevent Abusive Debt Collection Practices
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 32 MRSA§11002, sub-§§1-A to 1-C, 5-A, 7-A, 7-B and 8-C are enacted to read:
1-A. Cause of action. "Cause of action" means a lawsuit or arbitration proceeding.
1-B. Charge-off. "Charge-off" means the act of a creditor removing an account from its books as an asset and treating it as a loss or expense because payment is unlikely.
1-C. Charged-off debt. "Charged-off debt" means a debt that has been removed from a creditor's books as an asset and treated as a loss or expense because payment is unlikely.
5-A. Debt buyer. "Debt buyer" means a person or entity that is engaged in the business of purchasing charged-off debt or other delinquent debt for collection purposes, whether it collects the debt itself or hires a 3rd party, which may include an attorney-at-law, in order to collect such debt. A "debt buyer" is considered a debt collector for all purposes.
7-A. Original creditor. "Original creditor" means the last person or entity that extended credit to the consumer for the purchase of goods or services, for the lease of goods or as a loan of money. The original creditor's name is the name it uses in dealings with a consumer.
7-B. Principal. "Principal" means the unpaid balance of the funds borrowed, credit used, the sales price of goods or services obtained or the capital sum of any other debt or obligation arising out of a transaction in which the money, property, insurance or services that are the subject of the transaction are primarily for personal, family or household purposes. "Principal" does not include interest, fees or charges added to the obligation or alleged obligation by the original creditor or any subsequent assignees or purchasers of the debt.
8-C. Resolved debt. "Resolved debt" means a debt that has been paid, settled or discharged in bankruptcy or for which the consumer is no longer liable.
Sec. 2. 32 MRSA §11013, sub-§§6 to 10 are enacted to read:
6. Required information to pursue collection activities. A debt buyer may not collect or attempt to collect a debt unless the debt buyer possesses the following:
A. The name of the current creditor or owner of the debt;
B. The original creditor's name at the time of the charge-off, if different from the current owner of the debt;
C. The original creditor's account number for the consumer at the time of the charge-off;
D. The principal amount due at charge-off;
E. An itemization of pre-charge-off interest and fees, if any, claimed to be owed;
F. An itemization of post-charge-off interest and fees, if any, claimed to be owed and whether those were imposed by the original creditor or any subsequent owners of the debt;
G. The date that the debt was incurred. In the case of a revolving credit account, the date that the debt was incurred is the last extension of credit made for the purchase of goods or services, for the lease of goods or as a loan of money;
H. The date and amount of the last payment, if applicable;
I. The names of all persons or entities that owned the debt after the original creditor, if applicable, and the date of each sale or transfer;
J. Documentation establishing that the debt buyer is the owner of the specific debt at issue; and
K. A copy of the contract, application or other documents evidencing the consumer's liability for the debt containing the consumer's signature.
7. Written requirement for payment agreement. A debt collector may not enter into a debt payment schedule or settlement agreement regarding a debt without providing a written copy of the payment schedule or settlement agreement to the consumer. The debt collector shall provide the written copy within 10 business days of entering into a schedule or agreement. A consumer need not make a payment on a payment schedule or settlement agreement until the written copy has been provided.
8. Acting on time-barred debt. A debt collector may not attempt to collect or initiate a cause of action against a consumer when the debt collector knows or reasonably should know that collection is barred by the statute of limitations set forth in subsection 10.
9. Transfer of ownership of debt. A debt buyer may not sell or otherwise transfer ownership of:
A. A debt without the information and documentation required in this section;
B. A resolved debt, an interest in a resolved debt or any financial information relating to a resolved debt; or
C. A debt that is beyond the statute of limitations period set forth in subsection 10, an interest in a debt that is beyond the statute of limitations period set forth in subsection 10 or any financial information relating to a debt that is beyond the statute of limitations period set forth in subsection 10.
10. Limitations for debt buyer cause of action. A debt buyer may not commence a cause of action against a consumer to collect a debt more than 3 years after the cause of action accrues. The date of accrual is the later of the date of charge-off and 180 days after the last regular payment on the debt. This limitations period applies notwithstanding any other applicable statute of limitations, unless such statute of limitations provides for a shorter limitations period.
A. Notwithstanding any other provision of any other law, when the limitations period set forth in this subsection expires, any subsequent payment toward, or written or oral affirmation of, such debt does not extend the limitations period.
B. When the limitations period set forth in this subsection expires, the right to collect the debt is extinguished along with any remedies available to the debt buyer pursuant to a cause of action to collect the debt.
Sec. 3. 32 MRSA §11014, sub-§1, ¶B, as enacted by PL 1985, c. 702, §2, is amended to read:
B. The name of the current owner or creditor to whom the debt is owed;
Sec. 4. 32 MRSA §11014, sub-§1, ¶¶B-1 to B-4 are enacted to read:
B-1. The name of the original creditor, if different from the current owner of the debt;
B-2. An itemization of the debt, including:
(1) The principal amount at charge-off;
(2) An itemization of the pre-charge-off interest and fees, if any, claimed to be owed;
(3) An itemization of the post-charge-off interest and fees, if any, claimed to be owed;
(4) The name of the creditor or debt collector that levied each interest or fee; and
(5) The date and amount of the last payment, if applicable;
B-3. The names of all persons or entities that owned the debt after the original creditor, if applicable, and the date of each sale or transfer;
B-4. The types of income that are exempt from being taken to satisfy a judgment under state and federal law;
Sec. 5. 32 MRSA §11019 is enacted to read:
§ 11019. Cause of action by debt buyer to collect debt
1. Debt buyer cause of action; required allegations. In a cause of action initiated by a debt buyer against a consumer to collect a debt, the debt buyer shall allege all of the following information:
A. A short and plain statement of the type of debt;
B. The information described in section 11013, subsection 6;
C. The basis for any interest and fees described in section 11013, subsection 6;
D. The basis for the request for attorney's fees, if applicable;
E. That the debt buyer is the current owner of the debt and a chronological listing of the names of all prior owners of the debt and the date of each transfer of ownership, beginning with the original creditor; and
F. That the cause of action is filed within the applicable statute of limitations period.
2. Debt collection complaint; attachments. In a cause of action initiated by a debt buyer against a consumer to collect a debt, the debt buyer shall attach all of the following materials to the complaint:
A. Documentation to establish the information required in section 11013, subsection 6;
B. A copy of the contract, application or other writing evidencing the consumer's agreement to the debt, which must contain the consumer's signature. If the debt arises from a credit card and no such signed document evidencing the debt ever existed, the debt buyer shall provide copies of the most recent monthly statement recording a purchase transaction, service billed, last payment or balance transfer and monthly statements from the 11 months immediately preceding the most recent statement; and
C. A copy of the bill of sale or other writing establishing that the debt buyer is the owner of the debt. If ownership of the debt has transferred more than once, a copy of each bill of sale or other writing establishing transfer of ownership of the debt must be attached. Each bill of sale or other writing evidencing transfer of ownership must contain the original creditor's account number of the debt purchased and must clearly show the consumer's name associated with that account number.
3. Consumer appearance. If the consumer appears for trial on the scheduled trial date and the debt buyer either fails to appear or is not prepared to proceed to trial and the court does not find a good cause for continuance, the court shall enter judgment for the consumer dismissing the action with prejudice. Notwithstanding any other law, the court may award the consumer's costs of preparing for trial, including, but not limited to, lost wages, transportation expenses and attorney's fees.
4. Requirements for judgment. In a cause of action initiated by a debt buyer against a consumer to collect a debt, prior to entry of a judgment or order against a consumer, the debt buyer shall file:
A. An authenticated copy of the contract, application or other writing that satisfies the requirements of Title 16 evidencing the consumer's agreement to the debt, which must contain the consumer's signature. If the debt arises from a credit card and no such signed document evidencing the debt ever existed, the debt buyer shall file authenticated copies of the most recent monthly statement recording a purchase transaction, service billed, last payment or balance transfer and the monthly statements from the 11 months immediately preceding the most recent statement;
B. An authenticated copy of the terms and conditions that apply to the consumer's account and establishes the basis for the interest and fees alleged;
C. Authenticated business records that satisfy the requirements of Title 16 to establish the information and documentation required under subsection 1; and
D. Notwithstanding any other law, if attorney's fees are sought under contract, an authenticated copy of the contract evidencing entitlement to attorney's fees.
5. Dismissal of cause of action. In a cause of action initiated by a debt buyer against a consumer to collect a debt, if a debt buyer seeks a judgment or order against the consumer and has not complied with the requirements of this section, the court may not enter a judgment for the debt buyer and shall dismiss the action with prejudice.
6. Post-judgment interest. Notwithstanding any other law, if the debt buyer is the prevailing party in an action against a consumer to collect a debt, any interest on the judgment must be:
A. The rate agreed upon in the original contract sued upon, which may not exceed an annual rate of 6% even though a higher rate of interest may properly have been charged according to the contract prior to judgment; or
B. An annual rate of 6% if there was no contract by the parties.
Sec. 6. 32 MRSA §11054, sub-§6 is enacted to read:
6. Effect of violation. If a debt buyer violates this Act, neither the debt buyer nor any other person or entity who may legally seek to collect the debt may be allowed to collect the amount of the original claim or debt or any interest, service charge, attorney's fees, collection costs, delinquency charge or any other fees or charges legally chargeable to the consumer on such debt.
summary
This bill amends the Maine Fair Debt Collection Practices Act to provide protection to debtors with regard to collection actions by debt buyers. A debt buyer may not collect on a debt without providing specified information that includes the name of the original creditor and all intervening creditors, as well as the sources of added fees and interest. The information must be included in the complaint to initiate the cause of action to collect the debt.
This bill establishes a 3-year statute of limitations that replaces all other limitations unless the existing limitations is a shorter period.
This bill provides that a debt may not be collected if a debt buyer violates the Act.