Massachusetts Toughens Rules for Small Claims Collection Lawsuits

The Massachusetts Supreme Judicial Court announced last week that it has changed some of the rules governing the use of small claims courts. The Court said that the changes were made specifically to address the volume of debt collection cases that are filed in small claims courts.

The rules changes come on the recommendation of the Small Claims Working Group, a panel of legal experts that was convened in 2006 to “examine and improve current small claims practices.” The Working Group was created, in large part, in response to a series of articles that appeared in the Boston Globe chronicling the perceived imbalance of debtors and collection law firms in small claims courts, which allow cases with remedies of up to $2,000.

In a press release detailing the changes, the Supreme Judicial Court (SJC) noted that “While the rules [changes] apply to all small claims matters, there will be a major impact on debt collection cases.” The changes address many of the issues identified by the Working Group in collection cases, and four in particular: increased certainty of service, insufficiently detailed claims, increased scrutiny of default judgments, and notice to the court when a judgment is paid.

Adam Olshan, an attorney with Law Offices, Howard Lee Schiff, P.C. in Worcester, Mass., agrees that collection law firms will be affected, some more than others. “This will impact the high-volume collection law firms,” he told insideARM.

According to the new rules, creditors filing a small claim arising out of their trade or commerce or who are collecting an assigned debt must certify that they have verified the defendant’s current address in one of several specified ways. If the plaintiff fails to verify the address, the court may not enter a default judgment if the defendant later fails to appear for trial.

The changes also add increased scrutiny to default judgments that are entered. They introduce a checklist for magistrates and judges of the specific factors that the law requires to be satisfied before entering a default judgment.