The CFPB has categorized the outline of proposals into three main sections: the integrity of the information, communication practices, and consumer understanding. AccountsRecovery.net will provide summaries of each section.
Collectors would be required to provide a litigation disclosure in all written and oral communications, which would indicate their intent to sue individuals if debts are not paid.
The litigation disclosure would inform the individual of the collector’s intent to sue, that a court could rule against an individual if the individual does not defend the suit, and that additional information about debt collection litigation is available on the CFPB’s website. A standard form or language is not anticipated.
One type of debt where collectors would not be able to sue, or threaten to sue, is on debts where the statute of limitations has passed.
When attempting to collect on a time-barred debt, collectors would have to provide disclosures to individuals. A disclosure would be developed if the CFPB opts to move forward with this proposal.
Subsequent collectors would be barred from suing an individual if a previous collector had provided a time-barred disclosure. Subsequent collectors would also have to include time-barred disclosures in the validation notice and first oral communication.
The Bureau is also considering a proposal that would require it to develop a disclosure that would inform individuals whether a particular time-barred debt can or can not appear on a credit report. The disclosure would be included in the validation notice and possibly as additional intervals. Consumers would have to physically provide written notification that they are making a payment on a time-barred debt before a collector can accept a payment.
Collectors may also have to waive their right to sue an individual when the individual revives a time-barred debt by making a payment.
The CFPB considered banning the sale of out-of-statute debt and the collection of time-barred debts but opted not to include that in its proposal.