FDCPA Reform Bill Introduced in House; Focuses on Time-Barred Debt

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U.S. Representative Steve Cohen (D-Tenn.) late last week introduced a bill that would amend the Fair Debt Collection Practices Act (FDCPA) to specifically outlaw nationwide the filing of collection lawsuits on accounts that are beyond the statute of limitations. The bill also places new requirements on disclosures collectors must provide regarding out of statute debt.

The proposal, HR 3402 — titled the Fair Debt Collection Improvement Act – was introduced on October 30 and referred to the House Committee on Financial Services. The bill has three additional Democrat co-sponsors: John Conyers (Mich.), Gwen Moore (Wis.), and Del. Eleanor Holmes Norton (DC). Moore is a member of the Financial Services Committee.

“Just like the United States government, consumers should pay the debts they owe, but they still deserve protection from harassment and the abusive and predatory tactics used by some debt collectors,” said Congressman Cohen in a press release.

The bill would explicitly bar debt collectors from bringing legal action against consumers on a debt for which the statute of limitations has expired. Cohen notes that while this practice is not currently illegal, most courts and state laws hold that creditors may not sue to collect such debts.

In addition, HR 3402 would require collectors who have purchased time-barred debt on the secondary market to inform debtors that: the debt collector (not the original creditor) now holds the debt, the debt collector cannot sue for the debt, and that—if applicable under state law—any payment made towards the debt by the consumer could restart the statute of limitations on the entire debt.

The full text of the bill was not yet available on Monday morning. The bill does, however, share the exact title as one introduced by Cohen in the last Congress. The previous Fair Debt Collection Improvement Act (HR 2361), introduced in July 2011, died in the House Financial Services Committee after attracting four additional sponsors.

That bill sought to amend Section 811 of the FDCPA (15 U.S.C. 1692i) by inserting the following language:

‘(c) A debt collector may not bring, or threaten to bring, legal action against any consumer on a debt in which the statute of limitations has expired.’

HR 2361 also proposed to add explicit language requirements for collectors’ communications with consumers regarding a time-barred account. It would have amended Section 805 (15 U.S.C. 1692c) to add:

‘(d) Communication With Consumers With Time-Barred Debt- In connection with the collection of debt in which the statute of limitations has expired, a debt collector shall disclose to a consumer the following:

‘(1) The debt has been transferred to the debt collector.

‘(2) The creditor no longer holds the debt.

‘(3) As a result of the expiration of the statute of limitations with respect to such debt, the debt collector may not bring legal action against the consumer to collect such debt.

‘(4) Any payment by the consumer towards the debt may cause the statute of limitations for such debt to reset.’



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Posted in Collection jobs, Collection Laws and Regulations, Debt Buying, Debt Collection, Debt Statute of Limitations, FDCPA, Featured Post .

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  • avatar Jeffrey Weinstein says:

    If this passes, it could be good for the industry as a whole. Many of the horror stories we see in the newspapers about collectors involve aggressive collection tactics used to collect on this out-of-statute debt. Yes, people should pay their bills, but I always thought going after this “zombie debt” was going just a little bit too far.

    Of course, if your business model involves collecting out-of-statute debt, then this is terrible news.

  • avatar Sisko says:

    “Cohen notes that while this practice is not currently illegal, most courts and state laws hold that creditors may not sue to collect such debts.” So in other words, we’re just piling-on the debt collectors to gain popularity. Fine, whatever, I too think that collecting on these old debts creates too much of a problem for the industry. In fact, I would say that it should go one step further and make it outright illegal to collect after both the SOL and credit reporting periods have expired.

  • avatar todd bean says:

    So they want to make something that is already an FDCPA violation, suing on a time barred debt, illegal; and just call it something else that means the same thing as illegal.

    Makes as much sense as passing new gun laws that make it illegal to do or own something that it was already illegal to do or own, but just saying it in a different way.

    And they want this new language in the letters to protect who? An idiot that would pay on a ten year old debt because they thought they had to pay on it and not out of some moral obligation is not going to even read or understand most of the letter.

    Sink or swim on some of this. If you are too dumb to figure this one out and need the government telling you that if you got a loan from Citibank ten years ago and now Joe’s National Loan Recoveries Network is calling you and writing you about that ten year old debt, that you have no legal obligation toward that debt, then you hopeless anyway.

  • avatar Debt Guy says:

    I know this is a really hard concept for you to understand Brandon because you aren’t one of these folks but most people keep their word even without the threat of legal consequences. Speaking only for myself, knowing that my word means something is a point of pride. I honestly enjoy being trustworthy and responsible even in the face of adversity.

    People who keep their promises aren’t “stupid” as you like to call them. You have some very serious character flaws which I believe you are aware of and trying to take people down to your level and beyond is likely just a way for you to feel better about yourself.

    You know what might help make you feel better about yourself? Getting a job and holding onto it for awhile. Quit wasting so much time on the internet talking about how great you are (haha!!) because clearly it’s not paying the bills. Life would be much less stressful for you if you weren’t constantly just scraping by due to your own bad decisions.

  • avatar Commercial Guy says:

    Todd, maybe you should re-read this. It is NOT currently illegal to sue someone on a time-barred debt; the statute of limitations is an affirmative defense that must be raised by the debtor in order to be considered. This would remove the necessity of having to raise the defense in order to prevail.

  • avatar todd bean says:

    Commercial Guy you are correct, but if it is a debt collector under the FDCPA, which most of time it will be on a SOL debt, it is a per se FDCPA violation. If somebody got sued with this law on the books then they would deserve to be shut down on the spot. At least the way the law is written now you can claim you did not know, pay your 1K and move on.

  • avatar todd bean says:

    Debt Guy,

    Notice how I don’t call you guys the same worn out crap you’ve heard for years? It has no effect and everybody has called you that a million times. Why do you think if he keep attacking me personally all the sudden I’m going to go, “you know what, after ten million times being called every name in the book by a debt collector, I finally get it and they are right.”

    Why are you wasting your time on personal attacks. I DON’T CARE what you call me for the 1,000,000,000 time. I can take the personal attacks, but could you not at least be like some of your friends, Commercial Guy being one of them.

    Guy is not even 1% behind my position on any of this but at least he makes arguments than can be discussed. Attack me all you want, but what you are at it, throw in a little legal substance into the argument while you are at it.

    I mean your already on the board and in the thread, so how much longer could it take? 20 seconds?

    I take it because I’m on your board and I can just leave if I don’t like it. So I get that I post on your home court so to speak so I get abuse I take and accept it and everything you say I don’t not agree with sometimes.

    I simply said 10 years ago when I thought the FDCPA was a grade of meat that I’d never forget the way I was treated and I don’t care if I really have zero effect overall (which until this current suit with CBOJ, I really felt nobody in your industry even cared, boy was I wrong, so to be honest I keep it up because you give me what I want, a debate and a fight).

    You can’t not respond so I love it when I goad you into responding, just like I did to the Credit Bureau of Jonesboro. You’re not as dumb as they are because you would have never actually engaged me in court and would have never thought you had a chance on appeal.

  • avatar todd bean says:

    Debt Guy to practice what I preach and actually contribute something more than a personal back and forth, my point was the type of “consumer” you are going to be dealing with are most likely not going to be like you.

    If the SOL is even an issue most likely all good will and good faith has been used and you have a serious problem and you are unlikely to get the money without the courts.

    So I’m not talking about somebody that gets behind a week on their bills. My point is that most debtors this will apply to already know about the SOL or they are so dang dumb and poor they could care less about a worthless judgment.

  • avatar Debt Guy says:

    Right. It’s all a personal back and forth for you Todd. For some very odd reason you care way too much about what we think of you – which is why you’re always trying so hard to convince us you’re a worthy adversary.

    And I’ll keep repeating myself because it’s really the only thing that needs to be said. Make better decisions. Get a job. Get out of collections. Pay your bills. Move on.

  • avatar mel-thompson says:

    Such Reform Bill for the FDCPA is a good one since it protects consumers whose credit cards have already reached its statute of limitations from debt collectors. In other words, if such reform will be approved, then consumers will not be given legal actions to pay their credit card debt whose credit card is already expired.

  • avatar BHA LLC says:

    i think the disclosures are simple and a good thing we inform each debtor that you are not being sued on an oos account, but at no time do you stop owing the money. some people say right out im not paying because the statue is expired but most do not , despite popular belief most people want to pay the bill regardless id its years statue.

    consider when you buy national and do not sue as your model……who cares what the date is. the percentage of the consumers who pay because of the statue is minimal at best.

    i think a more worthy law, would be to require a proper documentation of balances and doc requirements on sales from OC ALL THE WAY TO OOS.

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