ARM Industry Discusses Collection Law Changes in North Carolina
ARM legislative experts and collectors with operations in North Carolina weigh in on the impact newly-passed legislation will have for debt buyers with accounts in the state.
Accounts receivable management industry experts say that the recently approved North Carolina law -- SB 974, which will go into effect October 1, barring an unexpected governor’s veto -- will have harmful unintended consequences on consumers along with an unknown impact on debt buyers.
The bill incorporates a debt buyer under the definition of a collection agency and specifically defines a debt buyer as a person or entity engaged in the business of purchasing delinquent or charged-off consumer loans or consumer credit accounts for collection purposes, whether it collects the debt itself or hires a third party for collection or an attorney-at-law for litigation in order to collect such debt. SB 974 dictates that both active and passive asset buyers are defined as a collection agency ("North Carolina Legislation Targets Asset Buyers, Impacts Debt Collectors," Aug. 24).
Interactive Data - Who Are You Searching For?
Social Security Search. Bankruptcy Information. Directory Assistance (EDA). Real Estate Listings. Death Index.
Under terms of the proposed legislation, debt buyers are required to provide receipt after payment and itemization of debt, according to Barbara Sinsley counsel to DBA International, an association for debt buying professionals. “Even the principal [creditor] can’t break that down.” Debt buyers often aren’t buying the entire debt, but only a portion of it, she added.
Although North Carolina currently requires a collection agency to provide a consumer a receipt of payment if the payment is in cash, SB 974 requires a receipt be provided when any payment is received by or on behalf of a debt buyer. In addition to what must be included in a receipt, the receipt for payment received by or on behalf of a debt buyer must also include the name of the creditor(s) for whom collected, the account number assigned by the creditor(s), and the account number assigned by the original creditor if different from the current creditor for whom the debt is collected.
The receipt must also clearly state whether the payment is accepted as either payment in full, as a full and final compromise of the debt, or state the balance due after payment is credited if the payment is not in full.
Other portions of the bill that will directly impact debt buyers, according to DBA International:
- It will be deemed unfair to bring suit or collect at all on debt past the statute of limitations.
- To file suit, valid documentation including an itemized accounting and proof of ownership of the debt must be filed.
- Thirty (30) days written notice must be given prior to suit.
- Penalties not less than $500 per violation up to $4,000.
- Attorney's fees will not be awarded absent a signed writing and an unbroken chain of assignment.
Care to Comment?
(Please read our comments policy first.)
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Topics:
Companies:
Related Resources
News
Analysis
Publications
Research
Comments
Comment from DONALD DALY on September 2, 2009 at 11:40AM EST
HOW DOES THIS HARM CONSUMERS? THIS LEVELS THE PLAYING FILED REGARDING THE PURSUIT OF PAYMENTS AND IT'S ABOUT TIME. NOW IF THE REST OF THE STATES WILL DO SAME WE CAN ALL BE ONE BIG HAPPY FAMILY, AGENCIES, ATTORNEYS AND DEBT BUYERS. ONE BENEFIT SHOULD BE A COMBINED LOBBY EFFORT FOR THIS NEWLY ENLARGED FAMILY OF DEBT CHASERS.
Comment from Patrick Lunsford on September 2, 2009 at 11:47AM EST
To DONALD DALY:
While the story never said that the bill would "harm" consumers, one industry executive noted that there may be some unintended consequences for consumers that legislators did not fully think through.
On the second page of the story, this paragraph explains it: "The adverse impact of these rules on consumers could be substantial, according to Sinsley. If actual debt collection by debt buyers becomes too onerous under the rules, there could be a “rush to the courthouse” to file suits against debtors so that debt buyers can protect their interests, according to Sinsley. Another possibility would be for debt buyers to forgive the debt, issuing 1099C forms to taxpayers, which would impact them at tax time."
Comment from sd1950 on September 2, 2009 at 12:33PM EST
With all the liberals in the Federal Government and State Governments it is only a matter of time before collections Nationwide become very difficult.
We have a socialist as a President and have been leaning towards socialism for many years. The laws will only become more liberal.
Comment from DONALD DALY on September 2, 2009 at 12:47PM EST
TO PATRICK LUMSFORD: "WILL HAVE HARMFUL UNINTENDED CONSEQUENCES ON CONSUMERS" JUST SOUNDS ALOT LIKE "HARMING" THE CONSUMER TO ME. THE REST OF YOUR STATEMENT WOULD/COULD HAPPEN ANYWAY SO AT LEAST THE BILL PUTS AND END TO THE DIFFERENT STANDARDS AND SIMPLIFIES THE PROCESS WHICH IS BENEFICAL TO THE CONSUMER AND THE INDUSTRY.
Comment from The Avenger on September 2, 2009 at 6:16PM EST
Hey sd1950, I'm a lot more right-wing conservative than YOU are, because conservatism is first and always about doing the right thing. Suing poor families on time-barred debt that you bought for a penny on the dollar and then draining their bank account so their checks bounce and their electricity gets cut off, all to enrich multimillionaires a little more, is WRONG. Now, in NC, it just happens to be illegal, too.
And what was that about "debt buyers often buy only part of a debt"? I have NEVER seen that. What part of a credit card or phone bill do you not buy? In fact, some collectors and buyers overstate the amount, quite a bit! Did those guys buy MORE than all of the debt?
Debt buyers do not have to forgive a debt and send 1099Cs. Even then, as you should know, if the debtor is insolvent as they usually are, check IRS publications to see if that has to be recognized as taxable income. If I catch anybody doing that--filing 1099Cs just out of spite--we'll see if it fits under either consumer protection law or income tax fraud.
And back to sd1950, how is this all Obama's fault? It's entirely the debt buyers' fault for getting greedy and overreaching. That is typical liberal thinking--blaming everybody else for what you brought on yourself, by yourself. The NC Senate, Republicans and Democrats alike, voted unanimously for this bill. That's not socialism--that's doing the right thing.
Comment from JN on September 3, 2009 at 10:47AM EST
Yeah, the "Obama" statements everywhere is getting ridiculous. This legistlation is being passed because we finally have a state that is saying NO to the shady sides of the debt buying industry. Now only if this type of legistlation would be made Federal, then it would help everyone. It seems simple: If you can't validate the debt, then why would you buy it??? DUH!!
Comment from SpyBoy on September 3, 2009 at 12:36PM EST
Greetings,
While it is true that if the debtor is a " taxpayer " ( as that legal term is defined in Title 26 of the the US Code ), then the issuance of the 1099 is required, but, if the debtor is not a taxpayer, or stated another way, if the debtor is a " non-taxpayer ", then the issuance of the 1099 is not required.
Certainly, it is not the debt buyers responsibility to make the determination as to who is or is not a taxpayer or a non-taxpayer in any given circumstance, but, if the debtor provides legally sufficient information and documentation to the debt buyer of the debtors status that supports a particular debtors claim that they are a non-taxpayer, that they are not a " taxpayer ", then the debt buyer should be, as a matter of law, relieved of the responsibility of the issuance of the 1099 in that instance.
Comment from Brad on September 3, 2009 at 4:04PM EST
How about we move away from Obama comments all together - this is a STATE law from a highly CONSERVATIVE voting state. This has nothing to do with Liberal/Conservative - this has everything to do with 2 things: 1.) Shady Debt Collection Agencies/Buyers and, 2.) "Consumer Rights" Attorneys and websites telling every consumer in the world to file complaints no matter what the situation.
The states and the FTC isn't looking at the repeat filer rates on complaints against agencies. If someone has 14 debts and reads a website to file complaints on everything, well, 14 complaints are received by the FTC and the State Attorney General, regardless of whether the debt collector has even called the person.
Comment from MAJ on September 4, 2009 at 10:42AM EST
I cant stand OBAMA. I am extremely conservative in my political views and I agree 100% with BRAD and JN. Leave the BS politics out of this decision. This is about debt buyers and the "fleecing" they have been doing for years. Its about time they started getting treated appropriately. To echo "JN"'s abservation, which appears to br the brightest one of the lot, "If you cant validate it, dont buy it".