Battle Brewing Over Fate of Collection Industry During Coronavirus Response

For lack of a better word, there is a battle brewing over the fate of the debt collection industry in the midst of the country’s response to the coronavirus pandemic. On one side, the industry is fighting to keep collection agencies open and people employed. On the other, lawmakers, regulators and consumer advocates who want collection activity shut down so people do not have to worry about paying debts during a crisis.

On Saturday, ACA International sent out an email notifying its members of correspondence it sent to state lawmakers, attorneys general, and other policy makers, urging them not to force the closure of collection agencies.

On the other side, a group of 17 New York State Senators and 63 consumer advocacy groups sent letters to New York Gov. Andrew Cuomo recommending a moratorium on collection activity in the state.

For the most part, the two letters are asking for the same things, including a stay of enforcement on all judgments and garnishments and suspending the entry of new default judgments. But the letters also seek to suspend any payments on currently settlements with payment plans, as well.

While calling for “an immediate moratorium on debt collection,” the letters do not specifically state that agencies should stop making outbound calls or taking payments when contacted by an individual. That is the kind of vagueness that creates problems, not solutions.

Last week, the state of Nevada issued guidance recommending that all collection agencies in the state close down for 30 days, even though the language used in the notice was confusing about to whom it applied. And Rep. Maxine Waters [D-Calif.], the chairwoman of the House Financial Services Committee has issued guidance seeking to halt all debt collection activity until 120 days after the pandemic is over.

“If professional debt collectors’ businesses are not empowered to remain open, consumers will lose a critical resource to assist them,” wrote Roger Weiss, the president of ACA in the association’s correspondence. “This is magnified by the fact that most creditor clients that we are working closely with are facing unprecedented outreach from consumers who need them to continue to lend and provide services. In fact, many creditor partners are turning to the collection industry as the knowledgeable professionals to assist them in managing call volumes and overflows.”

One thing is immediately clear. If the industry does not continue to speak up, it will find itself shut down. There is no doubt that this is an incredibly challenging time for companies in the credit and collection industry. Companies are trying to find ways to stay open when states are requiring residents not to leave their houses unless it is essential to do so while at the same time facing orders that would grind their businesses to a halt for who knows how long.

The only way that is not going to happen is if professionals from across the collection industry make it known how important their jobs are to the economy and the benefits they can provide in this crisis.

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