Important Changes to Minnesota’s Statute of Limitations
and Default Judgment Requirements
On May 24, 2013, Minnesota Governor Mark Dayton signed into law House Bill 80, a bill that amends the Minnesota statute of limitations requirements and creates new standards for documentary evidence prior to obtaining a default judgment on a consumer debt.
The changes to the Minnesota statute of limitations largely benefit creditors and purchasers of distressed receivables by strengthening the existing six year period for bringing legal action by exempting consumer debt from the “state borrowing statute.” With this change, the period for filing suit against a Minnesota resident will no longer be affected by a contract that has a nexus to a state with a shorter statute of limitations period. Additionally, the law will prohibit payments received after the expiration of the statute from reviving the statute of limitations period for bringing suit. These provisions will take effect on August 1, 2013.
The documentary evidence requirements to obtain a default judgment (with several distinctions based on whether the action is brought in Conciliation Court versus District Court) will now include:
- Written contract between the debtor and the original creditor, provided that if the contract does not exist, other evidence establishing the terms of the account relationship will be permitted which may include a monthly or periodic billing statement.
- Admissible evidence that the defendant owes the debt.
- Last four digits of the debtor’s Social Security number, if known.
- Admissible evidence establishing the balance owed at the point of charge-off and a “breakdown” of any post charge-off interest, fees, or charges.
- Admissible evidence providing the complete chain of title, including documentation or a bill of sale evidencing the assignment, including that the particular debt was included in the assignment.
- Proof that the summons and complaint was properly served.
- Proof the plaintiff mailed the debtor a notice of intent to apply for a default judgment.
Please note that the foundation for such evidentiary requirements may be established through an affidavit at the court’s discretion. These requirements take effect on September 1, 2013 and will only apply to cases filed on or after that date.
DBA encourages all members who own accounts with Minnesota addresses to carefully review the provisions of this new law that are contained in House Bill 80.
DBA would like to express gratitude to Bill Hicks, Gary Roberts, and the Minnesota Creditors Rights Association for their many hours of collaborative efforts with the Minnesota legislature to draft a bill favorable to our industry. They were able to successfully negotiate removal of a provision in the bill requiring a court hearing on every default judgment as well as adding language eliminating the state borrowing statute.