In every business, there arises the question as to what to do about lost documents. This is especially true in the consumer finance business where the entire asset value of the business is caught up in the existence of the notes receivable. Fortunately, most states have rules of evidence and rules of procedure that permit proving the existence of lost documents. So, even if the state does not have a statute specifically addressing lost loan documents, there is a process (as Coach Saban says)!

First, most states’ Rules of Evidence and Civil Procedure address best evidence document production; and such rules are quite helpful in the situation of a lost loan note. For example, The Alabama Rules of Civil Procedure, Rule 44(h) Business Entries—is instructive in reconstructing the obligation if necessary. Basically, that Rule permits “Business Entries” to substitute for loan documents.

Secondly, Alabama Rules of Evidence Article X, Contents of Writings, Rules 1002 Requirement of Original, 1003 Admissibility of Duplicates, and 1004 Admissibility of Other Evidence of Contents (1) Originals lost or destroyed and (2) Original not obtainable, is also helpful:

Even if there is some question that is raised under Alabama Rules of Evidence 1002, 1003 and 1004 as to admissibility, the Alabama Uniform Electronic Transactions Act will support use of copies both in collection activities and in litigation—assuming electronic records are available. The Uniform Electronic Transactions Act Section 8-1A-2 defines “Electronic,” “Electronic Record,” and “Electronic Signature.” Section 8-1A-7 addresses the legal recognition of electronic records, electronic signature and electronic contracts; and Section 8-1A-13 addresses admissibility of electronic records into evidence: “(a) In any proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.”

And note that the Uniform Electronic Transactions Act is just that—a uniform law adopted by most states in the USA. So, wherever you are engaged in business, this uniform law probably applies.

Finally, my State Banking Department accepts e-signatures and electronic storage of records, as long as copies can be maintained in the “state examiner’s file.” 

Practice Pointer: A combination of the various state’s rules of procedure, rules of evidence and electronic transactions, may prove helpful in protecting against lost documents. 

Please Note: This is the two hundred-twenty-sixth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.