A number of individuals, companies, and associations waited until the last minute to submit their comments about the Consumer Financial Protection Bureau’s proposed rule about time-barred debt disclosures. Now that the comment period on the supplemental notice of proposed rulemaking (SNPRM) has closed, the CFPB will analyze the comments and then issue a proposed rule, which will include its own comment period, to be followed by the issuance of a final rule.
There are some in the industry who believe the CFPB is going to issue a final debt collection rule and the time-barred disclosure rule at the same time, but the agency has not made any official statements to that fact. The CFPB has said it plans to issue a final debt collection rule in October, about 18 months after it issued its proposed debt collection rule.
The SNPRM 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.
ACA International came out in its comments and said it was not supporting the proposed rule, largely because it would create a “new layer of obligations that will inspire yet more confusion and litigation.” Doubling down on its criticism, ACA added that “additional regulatory requirements in this area are more likely to make matters worse rather than better while imposing new burdens and onerous requirements on the regulated community.”
The lack of federal pre-emption of state laws on determining the statute of limitations is a big problem for companies trying to comply with out-of-statute requirements, and unless the CFPB does something about that first, it should “withdraw its SNPRM and focus on previously identified outdated sections of the FDCPA, to align with its mission to ensure that consumers have access to markets for consumer financial products and services that are fair, transparent, and competitive.”