"Zombie Debt" Buyers Now Required To Produce Documentation Tracing Their Ownership As Part Of Collection Lawsuits Brought In NC Under New State Law

In Raleigh, North Carolina, the Asheville Citizen Times reports:

• Companies that buy up unpaid debt and pressure consumers to pay it off are being targeted under a new state law that requires them to prove the people they're chasing actually owe them money. Supporters say the regulations appear to be the first in the nation to target debt buyers.

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• Advocates who pushed for the regulations on debt buyers say the collectors scare consumers into paying up, even if the debt has been paid or a statute of limitations for collection has expired. “These people would send them money, and they’d never mark the debt paid, and they’d sell it to somebody else,” said state Sen. Martin Nesbitt, D-Buncombe, “and lo and behold, here they’d come again.”

• In other cases, the collectors simply pursue the wrong person, Attorney General Roy Cooper said. Cooper said a worsening economy has led more companies into the debt buying business, where they can pay pennies on the dollar to buy up debt that businesses like credit card companies have given up on collecting. They use “very aggressive tactics to try to collect this money,” he said.

• The law requires documentation as part of any lawsuit tracing how the debt has changed hands. It mandates 30 days written notice before a lawsuit. When debt buyers receive a payment, they must issue a detailed receipt. Violators can face fines up to $4,000.

For the story, see NC cracks down on debt buyers. zombie debt zeta