A New York judge has proposed new filing requirements for debt collectors that will bring fairness to state consumer cases and put them in line with due process. Judge Jonathan Lippman says many debtors discover they have been sued only after their bank accounts are frozen or their wages are garnished. Others are never served a notice of a lawsuit and lose the case simply by default.
More than 100,000 consumer credit card lawsuits are filed in state courts annually, most from third party buyers of delinquent credit card debt. Some of this debt, which is referred to as “zombie” debt, is several years old. The new rules would be implemented by June 15th and are intended to stop default judgments based on what the judge refers to as “robosigned” affidavits, “containing few if any facts relating to the history of the debt at issue.”
Instead, plaintiff creditors would have to file detailed court affidavits identifying the specific content at issue, the credit agreement, the complete chain of debt ownership, an itemized list of the principle interest and other charges. Default judgments would be prohibited where notices are returned because of an unknown or wrong address.
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