ACA International Advocates for Balance in Next Coronavirus Relief Legislation


Proposal from U.S. Sens. Sherrod Brown and Elizabeth Warren calls for limitations on the industry.

5/5/2020 12:30

The next coronavirus aid package on Capitol Hill is expected to include a wish list of advocacy group priorities that could limit the accounts receivable management (ARM) industry’s ability to help consumers manage their payments and maintain long-term financial stability.

The Senate is back in session this week starting to consider more aid legislation, including U.S. Sens. Sherrod Brown, D-Ohio, and Elizabeth Warren, D-Mass. Members of the U.S. House of Representatives, while still at home, are expected to start sharing drafts of priorities for the next package as early as late this week or next week. The near moratorium on debt collection is expected to still be under consideration for the House draft.

The U.S. House of Representatives is expected to return in person to Washington in the next couple of weeks.

In an article on Medium, an online publishing platform with author-contributed content, the Democrat senators wrote, “Congress included some protections in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but much more must be done to ensure that everyone has access to relief. If Congress is serious about helping Americans weather this crisis and rebuild our economy, the next coronavirus aid package must include comprehensive consumer relief.”

While Congress has been on intermittent recesses and working from their home states due to the COVID-19 pandemic, ACA International’s advocacy team hasn’t slowed its efforts in advocating to ensure that the industry’s role in providing consumer benefits is considered in these proposals.

ACA continues to carry the message that the ARM industry plays a critical role in supporting the credit-based economy and consumer welfare depends on open communication. It is important to have policies that provide consumers with more options that will allow them to continue to access credit and services. This is critical due to the uncertainty about the length and severity of the economic impact related to the coronavirus.

Warren and Brown’s proposal contains six provisions related to debt payments and industry regulations.

  • Include protections to prevent debt collectors and banks from “garnishing” stimulus payments. ACA continues to educate lawmakers that its members are not and cannot target stimulus fund checks. Advocacy organizations have made several recent claims that, “debt collectors are eager to garnish these payments – threatening families’ access to food, shelter, and medicine, and endangering public health.” This narrative is inaccurate and shows a clear misunderstanding of the garnishment process and the work of the debt collection industry in general. Alternative to the suggestion that the debt collection industry is eager to garnish stimulus funds, the reality is professional debt collectors would not know the character of funds contained in a consumer’s bank account or the source of those funds, ACA CEO Mark Neeb wrote in a letter to U.S. Department of the Treasury Secretary Steven Mnuchin. ACA members seek to engage in early intervention with consumers using empathy and compassion, and work to provide consumers with options to control their own financial matters.
  • Warren’s and Brown’s second proposal would pause all debt payments and accrued interest, late fees or other penalties for nonpayment of a debt. The senators also propose to pause garnishments, evictions, repossessions, and utility disconnections.
  • Third, they proposed to limit “negative” credit reporting during the COVID-19 pandemic. “Nobody should be denied credit for a new home or car, prevented from renting an apartment, or fail a security clearance for a new job because they ran into trouble making payments during the coronavirus pandemic. If we want consumers to stimulate the economy and speed up a recovery, we need to give them the tools to do so,” the proposal states.
  • Fourth, Warren and Brown propose to “broadly cancel student loan debt to stimulate our economy. We must also extend the CARES Act protections for many federal student loan borrowers to all student loan borrowers, including private student loan borrowers.” The proposal would also allow borrowers to suspend payments without fees or consequences, halting wage garnishment and other involuntary debt collection, and expanding loan modification and affordable repayment options.
  • Fifth, the Consumer Financial Protection Bureau “must use its supervisory authority to monitor and detect consumer abuses. In the coming weeks, Congress needs to use its oversight tools to hold the CFPB accountable. Warren and Brown also call on the CFPB to issue guidance to clarify that lenders that do not properly abide by the credit reporting provisions in the CARES Act will be penalized, including lenders that do not properly indicate that a loan is in forbearance and enforce certain debt collection practices.
  • Finally, the proposal includes providing immediate relief from debts to prevent consumers from having to file for bankruptcy, while making that a more “accessible, affordable option” for consumers who need it. “Congress should add protections for homes, tax refunds, and any present and future stimulus benefits for Americans so that these assets can’t be seized by creditors.”

ACA will continue to follow this proposal. For members interested in learning more about advocacy and action on Capitol Hill in the coming months, register for the Washington Insights Livestream set for June 3.

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