Missouri Attorney General Chris Koster has joined with nonprofit state legal aid offices in calling for rule changes affecting debt-collection practices.
According to a news release, Missouri is experiencing a rise in debt-collection litigation that coincides with national trends. An
October study from ProPublica found filings and judgments obtained are disproportionately high among minority communities, and garnishment rates are highest among workers earning annual incomes from $25,000 to $40,000.
Koster’s office sought input on proposed reforms from Legal Services of Eastern Missouri, Legal Aid of Western Missouri, Legal Services of Southern Missouri and Mid Missouri Legal Services. The organizations issued a letter to the Missouri Supreme Court’s Commission on Racial and Ethical Fairness.
Lew Polivick, interim executive director and an attorney for Legal Services of Southern Missouri in Springfield, said this morning the rule changes are intended to curb abusive collection processes used to obtain default judgments against low-income consumers.
“It’s the debtors who don’t have attorneys who are bearing the brunt of this, and once these judgments are on file, they’re good for 10 years and can be renewed for another 10 years or longer,” Polivick said. “Garnishments are issued, liens are put on property and it can really damage a consumer.”
The three proposed amendments to state rules governing civil court procedures are:
• requiring debt collectors to produce proof establishing their right to pursue debts;
• limiting the circumstances in which default judgments can be granted; and
• requiring creditor attorneys to attest to the contractual authorization, necessity, recovery and legitimacy of fees and litigation costs.
“These proposed changes would provide important protections for consumers from the Wild West world of debt collection by forestalling abusive litigation practices, including frivolous litigation,” Koster said in the release. “I believe these reforms would also serve as an important step toward eliminating the disparate impact of debt-collection litigation on minorities who become targets of such litigation.”
Additionally, Koster’s office filed proposals for new consumer protection regulations that would deem it unlawful for agencies to file suit on time-barred debts or to trick consumers into unwillingly reaffirming debts.
“These proposed regulations would expose these types of debt-collection practices for what they truly are - unfair and deceptive,” Koster said in the release.
Polivick said the commission likely would request additional input from other legal offices in Missouri before submitting recommendations for state Supreme Court review.
