Speakers reviewed how the CFPB’s final debt collection rule addresses time-barred debt requirements. Editor’s note: This article is available for members only.
1/14/2021 16:00
The Consumer Financial Protection Bureau’s final debt collection rule—part two—addresses time-barred debt and how agencies can approach disclosures.
Tamar Yudenfreund, senior director, public policy at Encore Capital Group, David Schultz, partner at Hinshaw & Culbertson LLP, and Dennis J. Barton III, owner and managing attorney of The Barton Law Group LLC, discussed time-barred debt requirements in the rule that takes effect on Nov. 30, 2021, during Thursday’s ACA Huddle.
Members may recall that the bureau issued a supplemental notice of proposed rulemaking (SNPRM) on this topic in the spring of 2020. Most of the proposals in the SNPRM ended up by the wayside, including the proposed time-barred debt disclosure requirement and all model language and forms for time-barred debt collection.
Now, according to the presentation, the CFPB rule says that a debt collector may, but does not have to, disclose to a consumer that a debt is, or may be, time-barred. Other notes:
- A separate NPRM contains proposed disclosure language.
- In its commentary to the final rule, the CFPB stated it decided not to adopt previously proposed language due to concerns raised by the accounts receivable management industry and consumer groups.
- However, the CFPB stated that, in many circumstances, disclosure can effectively cure the potential deception associated with the collection of time-barred debt.
Yudenfreund, Schultz and Barton also reviewed relevant case law and cases related to time-barred debt, such as Midland Funding, LLC v. Johnson.
Of note, for reasons relating to legal accuracy, ACA has historically referred to debts that have aged beyond the statutory period for enforcement as “out-of-statute debts,” ACA previously reported. That’s because, in most jurisdictions, creditors and their agents have not historically been prohibited from pursuing legal action on debt that have passed the statutory limitations period, i.e., legal action on those debts is not “barred” merely by the passage of time. Rather, those debts were merely subject to an affirmative defense that the consumer would have to raise in court and prove. But with the CFPB’s adoption of this Section 1006.26, “time-barred debt” has officially become the accurate term in the Fair Debt Collection Practices Act context.
View the presentation on time-barred debt on the CFPB Rule Series webpage and tune in at 11 a.m. CST Friday for the final webinar on medical debt with speakers Pam Kirchner, CEO of BCA Financial Services Inc., and Shawn Gretz, president of Americollect.
ACA members can also download the ACA Mobile app for reminders on the upcoming ACA Huddle webinars and listen to the presentations, live or recorded, on the go.
Thank you to the sponsors of the ACA Huddle CFPB Rule Series, Neustar and Ontario Systems.
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