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H. 3390

STATUS INFORMATION

General Bill
Sponsors: Reps. Taylor, Dantzler, Frye, Littlejohn, J.R. Smith, Toole and Vaughn
Document Path: l:\council\bills\bbm\10506mm05.doc

Introduced in the House on January 26, 2005
Currently residing in the House Committee on Labor, Commerce and Industry

Summary: Assignment of a nonnegotiable instrument to a collection agency

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   1/26/2005  House   Introduced and read first time HJ-84
   1/26/2005  House   Referred to Committee on Labor, Commerce and Industry 
                        HJ-84

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

1/26/2005

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 37-5-119 SO AS TO PROVIDE FOR ASSIGNMENT OF A NONNEGOTIABLE INSTRUMENT TO A COLLECTION AGENCY BY A CREDITOR, TO PROVIDE CRITERIA FOR AN EFFECTIVE ASSIGNMENT OF THE INSTRUMENT, TO PROVIDE FOR PURSUIT OF A CLAIM BY THE ASSIGNEE BASED ON THE INSTRUMENT, AND TO DEFINE "COLLECTION AGENCY"; AND BY ADDING SECTION 37-10-108 SO AS TO PROVIDE FOR ASSIGNMENT OF A RIGHT TO RECEIVE PAYMENT WHICH IS EVIDENCED BY A NONNEGOTIABLE INSTRUMENT AND TO PROVIDE, FURTHER, THAT AN ASSIGNEE IN THE REGULAR COURSE OF BUSINESS MAY BRING AN ACTION ON THE DEBT EVIDENCED BY THE ASSIGNED INSTRUMENT.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Part 1, Chapter 5, Title 37 of the 1976 Code is amended by adding:

"Section 37-5-119.    (A)(1)    As used in this subsection, 'collection agency' means a third party who, for compensation, contingent or otherwise, or for other valuable consideration, offers services to collect an alleged debt asserted to be owed to another.

(2)    'Collection agency' does not mean a person whose collection activities are confined to and directly related to the operation of another business and does not include a:

(a)    bank, including the trust department of a bank, trust company, savings and loan association, savings bank, credit union, or fiduciary, except those that own or operate a collection agency;

(b)    real estate broker, real estate salesperson, limited real estate broker, or limited real estate salesperson;

(c)    retail seller collecting its own accounts;

(d)    insurance company authorized to do business in this State or a health maintenance organization authorized to operate in this State;

(e)    public officer or judicial officer acting pursuant to a court order; and

(f)    public utility.

(3)    'Nonnegotiable instrument' means an account, a bill, a bond, or other evidence of indebtedness, none of which contains words of negotiability.

(B)    A collection agency with a place of business in this State may take assignment of a nonnegotiable instrument of another person in its own name as the real party of interest.

(C)    A collection agency may not commence litigation for the collection of the debt evidenced by the nonnegotiable instrument unless it has taken the assignment in accordance with all of the following requirements:

(1)    The assignment was for value, voluntary, properly executed, and acknowledged by the person making the assignment to the collection agency;

(2)    The collection agency did not require the assignment as a condition to listing the account, bill, bond, or other evidence of indebtedness with the collection agency for collection;

(3)    The assignment was manifested by a written agreement separate from and in addition to a document intended for the purpose of listing the account, bill, or other evidence of indebtedness with the collection agency. The written agreement must state the effective date of the assignment and the consideration paid or given for the assignment and expressly must authorize the collection agency to refer the claim based on the assignment to an attorney admitted to the practice of law in this State for the commencement and conduct of the litigation;

(D)    A collection agency must commence litigation for collection of the debt evidenced by an assigned nonnegotiable instrument in a court of competent jurisdiction located in the county in which the debtor resides.

(E)    This section does not affect a person described in subsection (B)(2).

(F)    This section does not relieve a collection agency from complying with the 'Fair Debt Collection Practices Act,' 91 Stat. 874 (1977), 15 U.S.C. 1692, as amended, and does not deprive a debtor of the right to assert defenses available at law."

SECTION    2.    Chapter 10, Title 37 of the 1976 Code is amended by adding:

"Section 37-10-108.    A person may assign his right to receive a payment, as evidenced by an account, bill, bond, or other nonnegotiable evidence of that right, by endorsement of the nonnegotiable instrument evidencing the debt. The assignee who takes the assignment for value and in the regular course of business has a right of action in his own name on the debt, subject to any defense or counterclaim the debtor has against the assignor before notice of the assignment."

SECTION    3.    This act takes effect upon approval by the Governor.

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