State Legislatures Introduced Two New Debt Collection Laws Last Week

Two new bills aimed at the debt collection industry were introduced in state legislatures last week. One in Indiana would explicitly define debt buyers as collectors, for the purpose of regulation. And another in Minnesota contains novel language that would require debt collectors to create and maintain records of contacts with debtors.

The first couple months of the year are typically the most active for state bill introductions, as most legislatures are in session in the first quarter. 2015 is no exception.

The Indiana proposal, Senate Bill 211, defines the term “debt buyer” for the first time in that state and “Specifies that a debt buyer is a debt collector” under the new statute. The bill also enumerates a number of new disclosures that debt collectors must make when contacting Indiana debtors, aligning state law with provisions of the FDCPA.

Indiana’s bill also requires debt collectors to disclose the date of sale if the account has been sold to a debt buyer. An interesting provision of the proposal would allow the collector to provide the disclosures through email or online access to a secured web site containing all of the account-level disclosures.

SB 211 has already been referred to a Senate Committee which adopted the language last week. The bill has three co-sponsors.

The Minnesota House also introduced a new ARM bill a week after proposing new language to define debt buyers similar to the Indiana bill.

The new bill, HF 301, requires a “Debt collection agency or individual debt collector to create and maintain records of its contacts with alleged debtors.” The new language would add a section to existing debt collection law laying out prohibited acts. It is intended to create a living record of a consumer’s acknowledgement or denial of a debt if their account moves to another collector.

The language specifically reads:

No collection agency or collector shall: when contacting an alleged or suspected debtor in connection with a specific debt, fail to add to its file on the debt a notation providing the name and contact information of the alleged or suspected debtor and whether the alleged or suspected debtor acknowledged or denied the debt. If the creditor or an assignee subsequently terminates its contract with the debt collection agency, or vice versa, the debt collection agency must provide to the creditor or the creditor’s assignee, in writing, the debt collection agency’s information referenced in this paragraph, no later than 30 days after the termination. If the creditor or the creditor’s assignee subsequently retains one or more other collection agencies for the purpose of collecting the debt, those other collection agencies must not request, demand, or require the alleged debtor to again acknowledge or deny the debt.

The proposed language is fairly new in the world of state debt collection laws. If passed, the new provisions would take effect on August 1, 2015. The bill has two co-sponsors and was referred to the House Committee for Commerce and Regulatory Reform.