Directive Ensures Adjudication on the Merits in Consumer Debt Collection Claims
Delaware's Court of Common Pleas is at the forefront of a growing number of courts that are revising court rules to effectively manage consumer debt collection claims. On March 16, 2011, the court issued Administrative Directive No. 2011-1 regulating the content and procedure governing consumer debt collection actions filed after July 1, 2011. The impetus behind the Directive is twofold: to manage the strain imposed on the judiciary's finite resources by the explosion of e-filed consumer debt claims and to address the perceived procedural and substantive deficiencies raised by such claims. Like many other state courts, the Court of Common Pleas has experienced a marked increase in the number of collection claims. This increase reflects not only the state of the economy but also the convoluted structure of the debt collection industry. Under this structure, old debt is bundled and sold to a debt collector. The information sold may be outdated, cursory or inadequate to file a claim but is, nonetheless, used to generate automated complaints which are then e-filed.
Until the implementation of the new Directive, a multitude of issues affected collection claims in the Court of Common Pleas. Many plaintiffs did not communicate with the debtor before resorting to legal proceedings, or communications that did occur, were often inaccurate. Complaints lacked sufficient evidence to put a consumer on proper notice of the debt or included insufficient evidence to support the claim. In other instances, defendants were not served in a timely manner. As a result of these inadequacies, cases in the Court of Common Pleas were being resolved by defaults rather than adjudication on the merits. When the claims did go to trial, plaintiffs were often unprepared to present their case.
Recent efforts by Court of Common Pleas have worked to change the tide by instituting a standardized process providing adequate notice of a plaintiff's claim to the defendant while preserving the plaintiff's ability to enforce valid contractual rights.
Through this Directive, as of July 1, 2011, a consumer debt collection filed in the Court of Common Pleas must provide: (1) the name of the original creditor and the current owner of the debt in the caption; (2) the name of the original creditor with the last four digits of the debtor's original account number; (3) the name of the current owner of the debt; (4) if the current owner is not the original owner, the name of all previous owners of the debt; and (5) the amount claimed as currently owed, broken down by principal due at the time of default, interest, fees and other charges.
Exhibits must include a copy of the original contract or other documentary evidence of the original debt and a copy of the assignment or other documentary evidence establishing that the plaintiff/creditor is the owner of the debt. If the debt has been assigned more than once, proof of each assignment must be attached to establish an unbroken chain of ownership and must contain at least the last four digits of the original account number of the debt purchased, as well as show the debtor's name associated with that account number.
On the trial date, the court can dismiss the action with or without prejudice, continue the matter, or enter any order as justice requires, including awarding costs if one or more of the parties do not appear or are not prepared to proceed at trial. Attorneys' fees awarded must be reasonable. If the plaintiff/creditor fails to abide by the Directive's procedures, the court may deny or withdraw the entry of judgment.
The Court of Common Pleas' goal is that adherence to the Directive should result in a more efficient and streamlined court process that will ultimately benefit all parties involved.