Published On: October 25, 2021
CFPB Confirms Effective Date for Debt Collection Final Rules
(Reprint from CFPB, July 30, 2021) The Consumer Financial Protection Bureau (CFPB) today announced two final rules under the FDCPA will take effect in November. The first rule, issued in October 2020, focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. The second rule, issued in December 2020, clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications. The second rule also prohibits debt collectors from suing or threatening to sue consumers on time-barred debt. Additionally, the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.
The CFPB proposed extending the final rules’ effective date by 60 days to allow stakeholders affected by the COVID-19 pandemic additional time to review and implement the rules. The public comments generally did not support an extension. Most industry commenters stated that they would be prepared to comply with the final rules by November 30, 2021. Although consumer advocate commenters generally supported extending the effective date, they did not focus on whether additional time is needed to implement the rules. The alternative basis for an extension that many commenters urged, a reconsideration of the rules, was beyond the scope of the NPRM and could raise concerns under the Administrative Procedure Act. Nothing in this decision precludes the CFPB from reconsidering the debt collection rules at a later date.
The CFPB is committed to informing consumers about their rights and protections under the rules and assisting debt collectors in implementing them. Consumer education materials on debt collection and resources to help debt collectors understand, implement, and comply with the rules are available through consumerfinance.gov.
The CFPB will consider additional guidance for debt collectors, including those that service mortgage loans, as necessary. The CFPB recognizes that mortgage servicers are expected to receive a potentially historically high number of loss mitigation inquiries in the fall as large numbers of borrowers exit forbearance and that, as a result, mortgage servicers in particular may face capacity constraints. The CFPB will continue to work with all market participants to ensure a smooth and successful implementation.
Debt Collection Rule FAQs
(reprint from CFPB website) The questions and answers below pertain to compliance with the Debt Collection Rule.
This is a Compliance Aid issued by the Consumer Financial Protection Bureau. The Bureau published a Policy Statement on Compliance Aids, available here, that explains the Bureau’s approach to Compliance Aids.
MUSINGS BY DIANE:
Every day financially distressed neighbors are hounded and bullied by debt collectors. Many, if not most, use illegal procedures to collect debts, that may not even be collectable.
Consumer Financial Protection Bureau “CFPB”, was established to police banks, lenders, car dealers, payday lenders, student loans, banks, and many more. They focus on those who try to take advantage of people who don’t know their rights in dealing with unscrupulous businesses.
Unfortunately, the Trump administration gutted CFPB, but the good news is “they’re back”. Every week there is a new announcement of CFPB pursuing those who think they can ignore the law. The above article focuses on one of those groups – debt collectors. The new rules limit what they can do and the consequences of their bad behavior. But, in order for this to be successful, you have to be part of the process. If you do not report bad actors to both the CFPB and FTC (Federal Trade Commission), then the bad actors will continue to abuse others. Stand up and be heard.
– Diane L. Drain
About the Author: Diane Drain
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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