Maine Adopts New Law for Debt Buyers

Last week the state of Maine adopted a new debt collection law, HP 836 (LD1199), titled "An Act To Promote Fiscal Responsibility in the Purchasing of Debt, which add new requirements for debt buyers. 

The full text of the bill is available here.

Maine defines a "debt buyer" as:

"A person that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether the person collects the debt or hires a 3rd party, which may include an attorney-at-law, in order to collect the debt. "Debt buyer" does not include a supervised financial organization as defined in Title 9-A, section 1-301, subsection 38-A or a person that acquires charged-off consumer debt incidental to the purchase of a portfolio predominantly consisting of consumer debt that has not been charged off. A debt buyer is considered a debt collector for all purposes under this chapter."

Under the law, a debt buyer may not collect or attempt to collect a debt unless the debt buyer possesses the following:

1. The name of the owner of the debt;
2. The original creditor's name at the time of the charge-off;
3. The original creditor's account number used to identify the debt at the time of the charge-off, if the original creditor used an account number to identify the debt at the time of charge-off;
4. The principal amount due at charge-off;
5. An itemization of interest and fees, if any, incurred after charge-off claimed to be owed and whether those were imposed by the original creditor or any subsequent owners of the debt;
6. If the debt is not from a revolving credit account, the date that the debt was incurred or the date of the last charge billed to the consumer's account for goods or services received. In the case of debt from a revolving credit account, the debt buyer must possess the date of the last extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money;
7. The date and amount of the last payment, if applicable;
8. The names of all persons or entities that owned the debt after the time of the charge-off, if applicable, and the date of each sale or transfer;
9. Documentation establishing that the debt buyer is the owner of the specific debt at issue. If the debt was assigned more than once, the debt buyer must possess each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer; and
10. A copy of the contract, application or other documents evidencing the consumer's liability for the debt. If a signed writing evidencing the original debt does not exist, the debt buyer must possess a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money.

The law also states that a debt buyer may not sell or otherwise transfer ownership of a debt without the information and documentation listed above, and may not sell or transfer ownership of or information relating to a resolved debt.

In order to file a complaint against a consumer, a debt buyer must allege all of the following in their complaint: 

1. The information described above, including that the debt buyer possesses the documentation described above;
2. The basis for any interest and fees described above;
3. The basis for the request for attorney's fees, if applicable;
4. That the debt buyer is the current owner of the debt; and
5. That the cause of action is filed within the applicable statute of limitations period.

And in a collection action initiated by a debt buyer, the debt buyer must attach all of the following to the complaint:

1. A copy of the contract, application or other document evidencing the consumer's agreement to the debt. If a signed writing evidencing the original debt does not exist, the debt buyer shall attach a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money or the last payment or balance transfer; and
2. A copy of the bill of sale or other writing establishing that the debt buyer is the owner of the debt. If the debt was assigned more than once, the debt buyer shall attach each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer.

Finally, the law outlines penalties for non-compliance, and the fact that bona fide error is an acceptable defense, assuming the debt buyer can show a preponderance of evidence that the violation was not intentional, and occurred in spite of the maintenance of procedures reasonably adapted to avoid any such error.

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RMA International (formerly Debt Buyers Association) worked with the bill's sponsor and issued this statement from Mark Naiman, RMA Board President: “RMA is pleased with the consumer protections adopted in Rep. Sanborn’s bill as they are highly consistent with the rigorous national-leading standards contained in RMA’s Certification Program. As a result, RMA does not expect this new law to result in any major compliance concerns for RMA certified companies but plans to monitor the implementation of the new requirements to identify any unintended consequences that might occur."