• DYE CULIK PC | Consumer Protection Division

What Documents do Debt Buyers Have to Produce To File a Debt Collection Lawsuit in North Carolina

Updated: Jan 22

Debt buyers who file debt-collection lawsuits in North Carolina are required to file additional documents with the court proving that they own the accounts they’re collecting. This is intended to help protect consumers against undocumented junk debt collection. This post explains what a debt buyer is, what documents a debt buyer is required to file, and the penalty for violating these requirements. These requirements all come from the North Carolina Collection Agency Act, G.S. §§ 58-70-1, et seq.

First, what is a debt buyer? A debt buyer is a company that buys bad debts in order to collect them. A debt buyer doesn’t actually extend credit – it is not a credit card issuer or a bank. Sometimes debt buyers collect using the mails and phone calls, but debt buyers often end up filing debt-collection lawsuits.

The North Carolina Collection Agency Act defines a debt buyer as follows:

[A debt buyer is] a person or entity that is engaged in the business of purchasing delinquent or charged-off consumer loans or consumer credit accounts, or other delinquent consumer debt for collection purposes, whether it collects the debt itself or hires a third party for collection or an attorney-at-law for litigation in order to collect such debt.

G.S. § 58-70-15(b)(4).

Some common debt buyers are Midland Funding, Portfolio Recovery Associates, Unifund and Unifund CCR, Cavalry Portfolio and Cavalry SPV, Resurgent, and LVNV Funding. There are many more, too.

When a debt buyer files a lawsuit in North Carolina, the Collection Agency Act requires them to file two things: (1) a copy of the signed contract, or, if there is no contract, all documents generated when the card was used; and (2) a complete chain of all the assignments of the account.

As to the first requirement, the statute explains the following requirement under G.S. § 58-70-150(1), stating that the debt buyer must file

A copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant. If a claim is based on credit card debt and no such signed writing evidencing the original debt ever existed, then copies of documents generated when the credit card was actually used must be attached.

As to the second requirement, the statute says all assignments must be attached, explaining the following under G.S. § 58-70-150(2):

A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor's name associated with that account number

In a lawsuit not brought by a debt buyer, the plaintiff does not have to provide all of their proof at the outset. So why have this requirement for debt buyers’ lawsuits? The answer is simple – because debt buyers often do not have the documentation required to show that they actually own their alleged accounts. The North Carolina Legislature wisely passed the Collection Agency Act to try to circumvent this. Unfortunately, not all debt buyers comply with these requirements.

What is the penalty for a debt buyer’s failure to include the contract and proof of all the assignments? Under G.S. § 58-70-115, a debt buyer is deemed to have committed unlawful and unfair practices if it doesn’t include the documentation with its complaint. The penalty for a violation is the consumer’s actual damages, plus up to $4,000 in statutory damages per violation, under G.S. § 58-70-130.

A violation of these requirements is also an automatic violation of the North Carolina Unfair and Deceptive Trade Practices Act, G.S. § 75-1.1. This means that a consumer may also be entitled to treble (triple) damages, costs, and attorney’s fees, pursuant to G.S. § 75-16 and 16.1.

As you can see, North Carolina law requires that debt buyers prove at the outset that they own consumers’ accounts, and that the penalties for failing to do so are strict.

DYE CULIK PC is a North Carolina and Massachusetts law firm. Our attorneys represent individuals in consumer financial protection issues. If you have been contacted by a debt collector or a debt buyer, contact us at DYE CULIK PC to see how we can help you. We have litigated against most major debt collectors and debt buyers. Call 800.704.4214 or email for a no-risk case evaluation.