ACA is engaging with Congress about a 1,800-page recovery bill introduced by House Democrats. Editor’s note: This article is available for members only.
5/14/2020 9:10
House Democrats on Tuesday introduced an economic recovery bill that includes a number of provisions troubling to the accounts receivable management (ARM) industry. However, notably it does not include an outright ban on collections or impact the ability to make phone calls, despite legislation introduced in recent weeks that included broad communication restrictions.
The $3 trillion “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) ACT” proposes several changes that would have significant impact on the ARM industry. ACA International is working to educate Congress about troublesome provisions in the bill. The Senate is not expected to take up the full package from the House, and there will continue to be opportunities for Congress to remove the problematic provisions as it moves through both chambers of Congress. It is expected that negotiations will continue until the end of the month.
Concerns in the legislation:
- The bill separates consumer debt from small business/nonprofit debt, adding new restrictions to both. It also adds creditors to the definition of a debt collector, adding new restrictions to many entities not previously covered by the Fair Debt Collection Practices Act.
- Specifically it bans collecting any debt, by way of garnishment, attachment, assignment, deduction, offset, or other seizure, from wages, income, benefits, bank, prepaid or other asset accounts; or any assets of, or other amounts due to, a small business or nonprofit organization. It also increases penalties by 10 times for any violations and requires onerous defined payment plans.
- The legislation also includes vague language surrounding negative credit reporting during natural disasters, noting that restrictions on medical debt reporting are not restricted to the covered period. Credit reporting is limited for 120 days beyond the crisis.
- In regard to student loan collections, it states that effective from enactment to September 2021, the U.S. Department of the Treasury will pay the amount due on loans up to an aggregate maximum of $10,000. Any interest on a private education loan cannot be capitalized. On consumer reporting, no adverse credit information may be furnished on any private education loan. All involuntary collection on a private education loan must immediately be halted.
- For borrowers in default, no payment made or forbearance shall be considered an event impacting applicable state statutes of limitation. Other sections are related to repayment and forbearance for consumers and limitations on small business collections.
- There is also a section concerning establishing a credit facility at the Federal Reserve for temporary relief related to financial hardship from forbearance, which seems complex and does not provide permanent relief.
To review ACA’s working summary of the bill click here.