According to Swanson, many of these debt-buyers, who snatch up piles of other companies’ debts for a fraction of the cost, don’t do a good job of notifying the alleged debtor, so the defendant sometimes doesn’t make it to court. And on many occasions where the defendant does show up in court, they are ill-prepared in comparison with the representatives for the debt collectors.
As a result, she says that courts are too-frequently granting default judgements against defendants, sometimes when the evidence does not even back up the plaintiffs’ claims.
“A debt buyer should have admissible evidence,” Swanson said. “In our American court system, to win in court, you should have to prove your case in court.”
According to the legislation supported by Swanson, debt buyers would need to show that the amount of the debt is correct, that the defendant is in fact the one responsible for the debt, and that the plaintiff owns the debt.
The chair of the state’s Senate Judiciary Committee says that the court system has become overrun in recent years with debt-collection lawsuits.
Midland Funding, one of the country’s largest debt buyers, has filed over 15,000 suits since 2008 in Minnesota alone. Swanson’s office settled a suit against Midland in December, in which it was alleged that the company had pursued legal action against consumers based on flimsy evidence.
In testimony given during that suit, Midland employees admitted to signing up to 400 legal affidavits a day, often without reviewing or understanding them.