Debate Over North Carolina Debt Buyer Bill Gets Personal, and Nasty

A Senate Committee in the North Carolina legislature this week approved a bill that would soften that state’s requirements for debt collection lawsuits, especially for debt buyers. The prospect of a change to the rules has led to protests from some lawmakers and consumer advocates.

But while most opponents have substantive issues with the proposal, at least one member of the personal finance media resorted to name-calling and histrionics Wednesday.

Steve Rhode, under his brand the Get Out of Debt Guy, wrote an article unhelpfully titled, “NC Senator Michael Lee Might Be a Debt Collection Idiot.” The article, originally run on his own site, was posted to Huffington Post late Wednesday.

Michael Lee (R) is the sponsor of North Carolina Senate Bill 511, the legislation in question.

Rhode calls Lee’s bill, “idiotic,” and “ill-advised, ill-conceived and unwarranted.” Other than potentially calling a state Senator an idiot in his headline, he also characterizes Lee as “ill informed” in the piece.

So what’s in that bill, exactly?

Proponents of the measure argue that North Carolina’s infamous 2009 law targeting debt buyer collection lawsuits went too far, making the collection of legitimate debt onerous in the state. Most in the ARM industry consider the rules to be among the most restrictive in the country.

The biggest change the law would make is loosening requirements for documentation that debt buyers must present in a collection action. SB 511 would allow a “charge-off statement” from the original creditor in lieu of a copy of the original contract creating the obligation.

As Rhode states in his article, the “only” things required to bring a collection suit would be:

1. The original account number.
2. The original creditor.
3. The total amount claimed to be owed.
4. An itemization of post charge‑off payments or credits, where applicable.
5. The charge‑off balance, or, if the balance has not been charged off, an explanation of how the balance was calculated.
6. An itemization of post charge‑off fees, where applicable.
7. The date of last payment, where applicable.
8. The amount of post charge‑off interest claimed, and the basis for the interest charged.

Rhode also calls another Senator who defended the bill “clueless.” The article’s main contention, that Lee is a “debt collection idiot” is based partly on selective editing.

Rhode contends that Lee may be a debt buyer himself, because his law firm’s website states, “The firm focuses on…debt acquisition.” What Rhode omits is the fact that Lee’s practice focuses almost entirely on commercial real estate, and the unedited passage from Lee’s site reads, “The firm focuses on complex commercial real estate finance, debt acquisition and development matters as well as complicated entitlement and zoning cases.”

The bill passed out of the Senate Judiciary Committee on Tuesday and has been referred to the Committee on Finance. If Rhode’s opinion piece is any indication, there could be a fight brewing when the bill is presented to the full Senate or House for consideration.