Report Questions CFPB’s Proposed Time-Barred Debt Rule

A published report in a major metropolitan newspaper has published a report looking at the Consumer Financial Protection Bureau’s proposed time-barred debt disclosure rule, quoting consumer advocates saying that the industry should not be left to police itself and that the collection of time-barred debts should be banned.

The report from the Atlanta Journal-Constitution looks at the situations of two consumers who were being contacted by debt collectors to collect on debts for which the statute of limitations had expired. The article also quotes a number of consumer advocates and legal services attorneys and uses comments from Jack Brown, the past president of ACA International, to articulate the industry’s position.

“Aggressive collectors will likely comply with the letter of the disclosure requirements ‘while continuing to use high pressure collection tactics and limiting the likelihood that consumers will be protected by such disclosures,’ according to a recent brief by the National Consumer Law Center,” the article claims, without offering any objective proof aside from the two unnamed individuals who shared their experiences.

In Georgia, a partial payment on a time-barred debt is enough to restart the statue of limitations, and the advocates and consumer attorneys are concerned that, under the proposed rule, nothing would stop collectors from trying to take advantage of that fact.

The rule proposed by the CFPB would not affect the lengths of statutes of limitations set by each state, but would establish a national standard for how collectors must attempt to collect on debts where the statutes have expired. Individuals are not allowed to be sued for unpaid debts once the statute of limitations has expired, but collectors can still attempt to collect. In many cases, the courts have decided what a collector can or can not say when attempting to collect on a time-barred debt, and that has created a patchwork set of de facto regulations to which the industry must adhere.

Comments about the proposed rule are being accepted until August 4. Comments can be filed by clicking here. To date, only 19 comments have been filed.

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