A bill easing restrictions on the collection efforts of debt buyers won the endorsement of North Carolina's Senate Judiciary Committee in a voice vote Tuesday.

The endorsement came despite objections from some Democratic lawmakers and consumer advocates. Their concern is that the bill, should it become law, would lead to a torrent of abusive lawsuits against consumers. 

The bill would roll back restrictions against debt buyers imposed by a 2009 North Carolina law that was designed to protect consumers from abusive collections. 

Specifically, it would eliminate the requirement that a debt buyer must have detailed information about the debt – including when and where the debt originated and specifics about the amount of interest and fees agreed upon – before suing a consumer.

The legislation would bring debt buyers requirements in line with what other states demand. It "changes none of the existing protections for consumers against abusive debt collection practices,” Sheryl Wright, an executive with California-based debt purchaser Encore Capital Group said in a release.

Encore Capital has hired lobbyists in North Carolina to push the measure.

Kevin Anderson, who leads the consumer protection division in the North Carolina Attorney General's office, said the 2009 law has been effective in easing collection abuses. Such abuses have included lawsuits filed against consumers who actually had paid their bills or who couldn't even determine, based on the evidence presented in complaints, whether they had paid or successfully disputed. Such lawsuits, Anderson said, "seemed to be predicated on the notion that consumers just won’t show up and contest the suits. They didn’t have much evidence supporting” their claims.

Sen. Michael Lee, a Republican and a sponsor of the bill, and other Republican legislators said the measure is a reasonable way of making it easier for debt buyers to collect debt owed by consumers who failed to pay their bills.

Lee stressed that consumers sued by debt buyers have a right to demand itemized documentation of debts. A similar bill was discussed by the House Banking Committee on Monday but there was no vote taken.

Ellen Harnick, senior policy counsel for the Center for Responsible Lending, said the debt buyers don’t seem to be willing to pay "a little more" for the underlying documentation required by the 2009 law. That law was passed by a unanimous vote in the Senate, she said because lawmakers were troubled on behalf of taxpayers about what was happening in the courts.

Harnick argued that the bill voted on Tuesday shifts the burden of proof from the debt buyer to the consumer.

 

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