NCLC Lobbying CFPB on Rental Debt Issues

The National Consumer Law Center has released the results of a survey it conducted of legal aid and non-profit attorneys indicating a dramatic rise in the number of lawyers representing consumers who have rental debt, identifying it as a “barrier to decent housing,” especially for individuals with low income or minorities, and sent the results to the Consumer Financial Protection Bureau, asking it to protect consumers so they can obtain “decent and affordable housing.”

Nationwide, individuals owe approximately $15 billion in unpaid rental debt, according to the information that the NCLC sent to the CFPB. Protections that were put into place at the start of the COVID-19 pandemic are expiring, or have expired, leaving vulnerable individuals susceptible to debt collection actions.

More than 70% of the attorneys who participated in the NCLC’s survey said the number of consumers they worked with who had rental debt had increased, compared with their caseloads before the pandemic. Only 4% said the number of consumers they were representing who had rental debts had decreased.

Nearly 40% of respondents said their clients had been contacted by a debt collector about an alleged rental debt using a method other than a court proceeding, and 44% said their clients had an alleged rental debt on their credit reports.

“Negative credit report entries can present a long-term barrier to renters obtaining new housing,” said Chi Chi Wu, staff attorney at the National Consumer Law Center, in a statement. “In fact, about half (49%) of the attorneys who responded to the survey reported their clients had trouble finding housing as a result of alleged rental debt reported on a credit report.”

In its letter to the CFPB that accompanied the results of the survey, the NCLC reiterated a number of requests it has already made to the CFPB regarding rental protections, including requiring debt collectors to provide notice of Emergency Rental Assistance Program funds and prohibiting debt collectors from seeking payments that will be covered by ERAP while pausing collection efforts while ERAP applications are pending.

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