Bill Introduced in House to Prohibit Collection of Time-Barred Debt

A bill has been introduced in the House of Representatives that would amend the Fair Debt Collection Practices Act to prohibit the collection of any debt for which the statute of limitations has expired.

The text of the bill, H.R.2135, the Fair Debt Collection Improvement Act, is not yet available, but the sponsors of the proposed legislation, Rep. Steve Cohen [D-Tenn.], Rep. Suzanne Bonamici [D-Ore.], and Rep. Alexandria Ocasio-Cortez [D-N.Y.] issued a press release yesterday touting the bill’s introduction and objectives.

Given the legal procedures surrounding the statute of limitations, the sponsors of the bill wanted to make it easier for consumers to be protected from what the sponsors describe as “predatory” debt collectors. For example, if a consumer is sued for an unpaid debt after the statute of limitations has expired, the consumer must introduce evidence to prove that the statute has expired and that he or she should not be sued to repay the debt. As well, the sponsors pointed out, it is not illegal in many states to file a lawsuit seeking to collect on an unpaid debt after the statute of limitations has expired.

“This bill aims to prevent more predatory debt collection practices from taking place for consumers for which the statute of limitations has expired,” said Rep. Ocasio-Cortez in a statement. “Over time, records are lost and inconsistent evidence is presented that restarts the clock on debt that has expired. Consumers are owed these protections and I am proud to join my colleagues today to introduce the Fair Debt Collection Improvement Act.” 

How exactly collectors would be prohibited from attempting to collect on a debt for which the statute of limitations has expired was not mentioned in the press release announcing the bill’s introduction, nor was any penalty for violating the bill’s provisions.

It is probably worth noting that when it released Regulation F — the debt collection rule — last year, the Consumer Financial Protection Bureau had the opportunity to prohibit the collection of time-barred debt, and chose not to do so. The CFPB instead told collectors that they were not allowed to threaten to sue or file a lawsuit against a consumer after the statute of limitations had expired.

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