Print
On April 17, the League testified before the Legislature’s Committee on Judiciary in opposition to L.D. 1053, “An Act To Reduce the Period of Enforcement for Judgments Based upon Consumer Obligations.” The bill would reduce the amount of time a judgment from a court is enforceable from twenty years to one.
If a creditor does not take immediate action, debts ordered by a court would expire after just one year from the court order. Because the bill would be effective on any judgment entered in the last twenty years, it would make a number of court judgments worthless.
A judgment debt is the result of a court proceeding where the individuals have gone through legal process with all its safeguards. These consumers are often unable to pay their debts at the time the judgment is made and rather than bringing the case back to court right away, creditors can wait to collect the debts.
While this bill may have good intentions, the result is that many individuals will have money owed to them and no way to collect. If enacted, the bill would increase litigation, reduce the ability for credit unions to negotiate with borrowers, and would cause a significant portion of debt to be noncollectable.
In our testimony, we stated, “It can be easy to forget that these changes may have unintended consequences as to individuals — consumer obligations don’t just include credit card debt, but also includes payments to ex-spouses, small business owners, and the like.”
The League is closely monitoring this legislation and will keep our credit unions apprised as it moves through the legislative process.