CHANGES TO MAINE SMALL CLAIMS ACT ADVANTAGEOUS TO DEBT BUYERS

In 2009, the Maine Legislature made several changes to the Maine Small Claims Act, 14 M.R.S. § 7482 et seq. which changes became effective on June 13, 2009. The change which has attracted the most attention was the increase in the amount which can be considered a small claim from $4,500.00 to $6,000.00. This change was in keeping with the Legislature’s express intent that the monetary limit for small claims actions be reviewed every four years and adjusted as necessary to keep pace with inflation. See 14 M.R.S. § 7482.

Another significant change to the Maine Small Claims Act which did not receive as much attention but which opened the door for an increase in the filing of small claims actions was the Legislature’s recognition that a creditor could reduce the amount of its claim to meet the jurisdictional limits of the Maine Small Claims Act. 14 M.R.S. § 7485. For example, if a creditor has a claim in the amount of $6,600.00, exclusive of interest and costs, the creditor can choose to sue for the principal sum of $6,000.00 and elect to waive the balance of its claim. Prior to this change in the Small Claims Act, creditors attempting to waive the amount of their claims above the jurisdictional limit then in effect had increasingly been rebuffed by judges who ruled that a waiver was not allowed and that claims in excess of the jurisdictional limit could not be heard in small claims court even if the parties agreed to submit the claim at a reduced amount.

These two changes to the Maine Small Claims Act have resulted in a significant increase in claims being filed with the court, especially by debt buyers. Statistics maintained by the Maine Judiciary indicate that small claims filings increased statewide by 28% in 2009 over 2008, reaching a new all-time high of 11,392 small claims cases filed that year. A review of local court dockets reveals an increasing number of cases where debt buyers are plaintiffs. Debt buyers who purchase credit card and deficiency balance claims hold a high volume of claims that are under or slightly above $6,000.00 in amount. Such claims can now be processed at a much lower out of pocket outlay to creditors compared with the conventional pursuit of such claims by civil action as opposed to the small claims process. The small claims filing fee is $50.00 per case compared to a $150.00 filing fee for civil actions. Post-judgment disclosure filing fees are also less in small claims actions, where the filing fee is $15.00 per defendant compared to $60.00 for non-small claims disclosures. Given the significant volume of cases processed through the courts by debt buyers in particular, these lower filing fees result in a substantial reduction in capital outlay for litigation.

In recognition that debt buyers are increasingly using the small claims process, another change that the Maine Legislature also enacted in 2009 to the Maine Small Claims Act was the requirement that a plaintiff include with the small claims complaint a statement listing the name and address of the original creditor if the debt being collected was purchased by the plaintiff. 14 M.R.S. § 7484-A(3). This new requirement, which places minimal additional burden on debt buyer plaintiffs, should reduce confusion among defendants regarding the nature of the debt that is being collected, thereby hopefully reducing the number of disputed cases that the court must deal with.

The 2009 changes to the Maine Small Claims Act were intended, in the words of the Legislature, to “increase access to justice . . ..” PL 428 Sec. 4. These changes, coupled with the previous Legislative mandate that the Maine Supreme Judicial Court not enact any rule which restricts the number of claims that may be filed in any given period, seem to be achieving their desired intent.

If you are a debt buyer or lender in need of assistance with collection of small claims accounts involving debtors located anywhere in the State of Maine, the attorneys at Gosselin & Dubord, P.A. located in Lewiston, Maine have extensive experience with collection matters and stand ready to assist you. Please contact us at (207) 784-0037 or collections@gosselindubord.com.