State Courts Requiring More Proof to Obtain Affidavit Judgments in Debt Collection Cases

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On April 30, the Tennessee Court of Appeals ruled that affidavits submitted as evidence of a debt were inadmissible under the business records exception to the hearsay rule and judgment against the debtor was thus reversed because, absent such evidence, the creditor could not establish the existence or amount of debt. LVNV Funding, LLC v. Mastaw, M2011-00990-COA-R3-CV, 2012 WL 1534785 (Tenn. Ct. App. Apr. 30, 2012). The court found that the affidavits, which had been prepared specifically for the litigation in order to show existence and ownership of debt, did not incorporate by reference or otherwise summarize or interpret documents that are prepared in the normal course of regularly conducted business activity and therefore did not qualify for the business records exception to the hearsay rule. As another example of increased documentation requirements for debt collectors, new rules went into effect earlier this year in Maryland, where its Court of Appeals adopted rule changes that, effective January 1, 2012, similarly require debt buyers to provide more proof before being allowed to obtain affidavit judgments against consumers to recover debts. The new rules require additional information from debt buyers, including better proof of an existing debt or interest owed on a debt, and proof from the debt buyer that they own the debt they are trying to collect.