Editor's Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.
Legislation has been introduced in Illinois and New York that would require debt collectors to provide consumers with specific notices.
In New York, Assembly Bill 876 would require the initial written communication to a debtor to include the following:
As a debtor who owes or may owe a consumer claim, you are given some protection and rights by the New York and federal laws regulating debt collection procedures. You should be aware of your rights.
1. A debt collector may contact you or any member of your family or household directly. However, they may not contact you with such frequency, at unusual hours, or in a manner that can be expected to abuse or harass you. They also cannot threaten action which they do not take in the usual course of business.
2. A debt collector may not threaten to contact your employer regarding a debt prior to obtaining a final judgment against you. However, a debt collector may contact your employer to execute a wage assignment agreement if you, the debtor, have agreed to the assignment.
3. A debt collector cannot use a communication which appears to be authorized, issued, or approved by a government agency or attorney when it is not.
4. A debt collector cannot disclose or threaten to disclose information affecting your reputation for creditworthiness if the collector knows or has reason to know the information is false. A debt collector also cannot attempt or threaten to enforce a right when it knows or has reason to know the right does not exist.
For more information about your rights under state and federal debt collection procedures law, contact the Consumer Protection Division of the New York State Department of State at (insert the current telephone number or internet website established by the consumer protection division for receiving inquiries from consumers). You may also contact the New York State Attorney General at (insert the current telephone number established by the department of law for receiving inquiries from consumers) or (insert the current address of the website of the department of law).”
While the legislation is obviously well-meaning, it would require the addition of a huge amount of additional text in addition to the extraordinary amount already required by the regulations of the New York Department of Financial Services. Many have noted that there comes a point where additional notices simply overwhelm consumers instead of aiding them.
The Illinois legislation, House Bill 281, would require that a summons in a debt collection lawsuit include the following notice (format included in the legislation):
IF YOU OWE A DEBT, YOU HAVE RIGHTS
You Can PROTECT:
Your Social Security
Your Public Benefits
Your Veterans Benefits
Your Retirement Benefits
$7,500 in Equity in a Motor Vehicle
$150,000 to $200,000 in Equity in your Home
$15,000 in your Bank Account
You Can STOP:
Phone Calls from Debt Collectors
Verbal Abuse from Debt Collectors
Threats from Debt Collectors
You Have the RIGHT:
To Have the Court Review Any Agreement to Settle Your Case
To Ask for a Reasonable Payment Plan.
The exemption numbers above differ from existing Illinois law; the legislation also increases the following judgment or attachment exemptions:
- Homestead: increased from $15,000 to $150,000 for an individual, from $30,000 to $200,000 for two or more individuals
- Other property: increased from $4,000 to $15,000
- Any one motor vehicle: increased from $2,400 to $7,500
- Implements, professional books or tools of the trade: increased from $1,500 to $3,000
Additionally, the legislation modifies the amount of wages subject to garnishment, decreases the time to revive a judgment from seven years to five and sets the interest rate on consumer debt judgments of $25,000 or less at 2% per annum.