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CFPB issues updated debt collection proposal
The CFPB Friday published a supplemental notice of proposed rulemaking related to the issue of time-barred debt. Debt collection was included on the CFPB's fall rulemaking agenda and NAFCU has urged the bureau to exempt credit unions from any rulemakings on the issue. The rule, as proposed, does not apply to credit unions.
Under the proposed rulemaking, a debt collector that knows or should know that debt is time barred would be required to disclose:
- that the law limits how long the consumer can be sued for a debt and that, because of the age of the debt, the debt collector will not sue the consumer to collect it; and
- the debt collector’s right to bring a legal action against the consumer to collect the debt can be revived under applicable law, the fact that revival can occur and the circumstances in which it can occur.
The supplemental notice also includes model language and forms that debt collectors may use to comply. NAFCU previously requested that the bureau remove the "knows or should know" standard from the provision to provide clarity, but that language remains in the updated proposal.
Comments on the supplemental notice will be open for 60 days once published in the Federal Register.
Last year, the bureau issued a proposed rulemaking related to third-party debt collection, and NAFCU highlighted that credit unions "do not participate in abusive and harassing debt collection practices," but rather "operate to empower their members to get on track with outstanding debts."