Consumer Finance Alert - Default Judgments in Virginia Consumer Debt Collection in 2027

On April 8, 2026, Governor Abigail Spanberger approved House Bill 444, establishing the Uniform Consumer Debt Default Judgments Act (the “Act”) as § 8.01–465.26 through § 8.01–465.34 of The Virginia Code. Under the Act, creditors bringing consumer debt collection actions will face new requirements to (1) disclose specific factual information in their pleadings; and (2) provide a separate consumer notice before seeking a default judgment in such proceedings.

Consumer finance practitioners should prepare to comply with the Act by the effective date of July 1, 2027, by updating pleadings to include the required information and providing a consumer notice consistent with the provisions outlined herein.

The Act’s Scope – What and Who is Impacted?

The Act applies to actions to collect (i) unsecured consumer debt; (ii) secured consumer debt if the action is brought only to obtain a money judgment; or (iii) a deficiency remaining after disposition of property that secured a consumer debt.

“Consumer debt” is defined as “an obligation or alleged obligation of an individual to pay money that arises out of a transaction in which the money, property, insurance, or service that is the subject of the transaction is primarily for a personal, family, or household purpose.”

New Pleading Requirements to Meet

Substantive Requirements.

A creditor seeking to collect a consumer debt must include the following information in their complaint/amended complaint:

Each name and address of the consumer in the records of the creditor at the time of charge off or, if the consumer debt was not charged off, at the time of default;
Name of the creditor, including any merchant brand, affinity brand, or facility name associated with the consumer debt;
At least the last four (4) digits of the account number or other account identifier used in communicating with the consumer before charge off, or, if the consumer debt was not charged off, before default;
Date and amount of the last payment;
Date of charge off, or, if the consumer debt was not charged off, the date of default;
Amount of the outstanding balance;
Amount of the judgment sought by the plaintiff, itemizing the outstanding balance and any of the following amounts not included in the outstanding balance (i) total finance charges; (ii) total fees or costs; (iii) total attorney’s fees; and (iv) total credits and payments;
Statement as to whether the amount of the judgment may increase due to accrued interest, fees, or other charges;
Authority of the plaintiff to bring the action;
Facts sufficient to demonstrate that the action is being commenced in a proper venue;
Facts sufficient to demonstrate that the action is being commenced within the applicable statute of limitations; and
Unless the plaintiff is the creditor, (i) name of each person that acquired ownership of the debt after charge off, or, if the consumer debt was not charged off, after default; and (ii) date of each such acquisition of the consumer debt.

Required Documentation.

A creditor must also attach one of the following documents to demonstrate the consumer debt exists: (a) agreement signed by the consumer; (b) record of a purchase, payment, or use of an account; or (c) record otherwise demonstrating the consumer debt was incurred. If the plaintiff is not the creditor, the plaintiff must attach documentation sufficient to demonstrate the plaintiff’s authority to collect the consumer debt.

New Consumer Notice Requirement

The Act also requires that a creditor give a separate notice to the consumer before default judgment can be awarded. The Act provides a helpful, convenient, and instructive form notice in Virginia Code § 8.01-465.29(C):

CONSUMER NOTICE
WARNING
IF YOU DO NOT ACT, A DEFAULT JUDGMENT MAY BE ENTERED AGAINST YOU

Why am I getting this Notice?

You are getting this notice because (name of plaintiff) says you owe money. (Name of plaintiff) has filed a lawsuit against you to collect the money you owe.

What will happen if I do nothing?

If you do not [ ] file a response to the lawsuit and/or [ ] appear at the hearing on the date and time indicated on the attached summons, a judgment may be entered against you.

What happens if a judgment is entered against me?

The law provides multiple methods for a creditor to recover money against you. Your property may be taken and sold, money may be taken directly from your bank account, your wages may be garnished, or a lien may be put on your house or other real estate or your real estate may be sold.

If the judgment is not paid in full, the amount due may grow because of interest charges.

You will owe the amount of the judgment for at least 10 years, even if it no longer appears on your credit report.

The judgment may make it harder for you to get a job or insurance and more expensive for you to get a loan or credit card, rent an apartment, or buy a house or car.

Is help available?

Talk with a lawyer. A lawyer can explain the situation and help you decide what to do. The following office may be able to help you find a lawyer (name and contact information of legal aid or attorney referral service).

Plaintiffs are not required to use the form notice. However, Virginia Code § 8.01-465.29(B) requires that the consumer notice given be substantially similar in content to the form notice. If a plaintiff chooses not to use the form notice, their notice must include the following warnings:

If the consumer does not file an answer to the complaint or amended complaint within the time and in the manner indicated in the summons or does not appear for the hearing referred to in the summons, a default judgment may be entered against the consumer;
If such default judgment is entered against the consumer, the amount of the judgment, plus interest, remains in effect for at least 10 years, even if the judgment no longer remains on the consumer's credit report;
After entry of a default judgment, the plaintiff may, as permitted by relevant provisions of law, take steps to recover such judgment by initiating an action for (i) the judicial sale of the consumer's real property; (ii) requesting that the court issue a writ of fieri facias or writ of possession for the seizure or sale, or both, of the personal property of the consumer; (iii) attachment of specific personal property; or (iv) garnishment;
Entry of a default judgment may impair access to employment, insurance, credit, or housing;
An attorney may provide assistance in understanding the complaint or amended complaint and advice about what action to take in response to such complaint or amended complaint; and
Contact information for a legal aid or attorney referral service that may assist the consumer in finding an attorney who may provide free or reduced cost legal services.

Takeaways and Prudent Best Practices in Response

Starting July 1, 2027, a default judgment will not be entered in a Virginia consumer debt collection action unless the Act’s requirements are met. The takeaway best practice pointers for Virginia lawyers representing creditors in consumer debt collections are to draft pleadings and provide consumer notices in compliance with the Act’s heightened requirements in advance of the Act’s enforcement “go live” date to ensure clients maintain the right to seek default judgment.

If you seek assistance in review of your documentation and policies for compliance under the Act and/or have other questions about the Act, Kaufman & Canoles stands ready to assist through its Consumer Finance Practice Group and Consumer Debt Collection Team. Please contact Lisa Hudson Kim at 757.491.4017 or lisa.kim@kaufcan.com for more information on our consumer debt collection proceedings.