Georgia Bill Would Severely Restrict Collections for Debt Buyers

A bill that was passed by the Georgia Senate in late February would restrict the possible collections for a guaranteed account purchased by a debt buyer to the amount paid for the account. The legislation also contains language that would force debt buyers to reveal how much they paid for certain accounts.

The “Small Business Borrower Protection Act,” Georgia S.B. 448, was introduced by Senator Don Balfour “to provide for recovery limits for debt obligations by successor creditors; to provide for applicability; to require successor creditors to submit the amount paid for a debt during recovery proceedings; to provide for related matters; to repeal conflicting laws; and for other purposes.”

The strictest requirements are specific to the guarantors of debt, defined by the bill as “any person who agrees to pay, in whole or in part, the original debt obligation of another person.” The bill defines “person” as any natural person, corporation, or limited liability company, leading to the assumption that the bill is targeted at business borrowing.

But the bill did not explicitly exempt loan co-signers from the definition of “person.”

The main language of the bill lays out guidelines for “successor creditors,” plainly, debt buyers (emphasis added):

Any successor creditor shall be limited to recovery against any guarantor on any debt obligation to the lesser of:

1.    The actual amount paid for the debt obligation, plus interest at the interest rate stated on the face of the debt obligation from the date of purchase, transfer, or assignment of the obligation. The interest rate allowed under this article shall be a nondefault rate; or

2.    The maximum amount permitted to be collected under the guaranty.

The bill also states that the rules apply to the sale of judgments.

S.B. 448 additionally spells out a further requirement for debt buyers. “In any action to collect a debt obligation by a successor creditor, the successor creditor shall be required to prove the actual amount paid for the debt obligation,” the bill reads.

The bill passed the Georgia Senate with no Nay votes (45-0) on February 27. It has been referred to the Georgia House Committee on Banks & Banking. According to ACA International, the bill will be the subject of a hearing in the committee scheduled for tomorrow, Tuesday March 20.