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How the Consumer Financial Protection Bureau Debt Collection Rule Applies to You

Sarah Edwards | December 07, 2022

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: The Consumer Financial Protection Bureau’s Debt Collection Rules protects you from aggressive and abusive debt collectors. Under the new rule, debt collectors must be extremely careful when they contact you. They cannot say certain things or call more than appropriate. Knowing your rights can help you fight off debt collectors in and out of court—and win!

You may have heard of the Consumer Financial Protection Bureau’s (CFPB’s) new Debt Collection Rule. The Debt Collection Rule came into force on November 30, 2021, and provides specific safeguards to consumers who owe debts.

All debt collectors must abide by the new rules and fulfill their Fair Debt Collection Practices Act (FDCPA) obligations.

Some officials criticize the FDCPA for not explicitly outlining what practices are considered abuse of consumer rights. As the FDCPA became law in 1977 and was later amended in 2010, some rules concerning debt collection practices weren’t clear for people living in the internet age.

This article will delve into the details of the Debt Collection Rule, including new changes to communication practices and disclosures.

Who does the Debt Collection Rule apply to?

The Debt Collection Rule explicitly applies to debt collectors. “Debt collectors” include debt collection agencies and law firms that attempt to collect outstanding obligations on behalf of first-party creditors. For example, debt collection agencies that purchase debt from financial institutions must abide by the Debt Collection Rule.

While the Debt Collection Rule does not include financial institutions or other similar lenders in its scope, the CFPB may potentially use it against abusive first-party creditors.

Debt collectors must follow the new Debt Collection Rule when they call you

Under the new Debt Collection Rule, creditors may attempt to contact you via phone. However, certain new restrictions apply.

In the past, a debt collector could leave a message on your voicemail indicating the reason for their call. Anyone who heard the voicemail, including employers, family members, colleagues, and friends, would know that a debt collector was pursuing you for a debt.

The Debt Collection Rule requires that debt collection agencies leave only limited information on your voicemail. They cannot use language that indicates they are calling to collect a debt, and they may not identify themselves as debt collectors.

Instead, they must give a business name that doesn’t include the words “debt collection agency” or “debt collector.” The message can contain a phone number to reach the agency.

The Debt Collection Rule also clearly limits the frequency with which a debt collector may call you. As written, the law considers debt collectors abusive if they call you more than seven times within a week or call you within seven days of last having a phone conversation with you.

Finally, debt collectors may contact you only during authorized times. Calling before 8 a.m. or after 9 p.m. in your time zone is inappropriate. If the debt collector does not have specific information concerning your whereabouts, they may make an assumption about your current time zone based on the information they have.

Debt collectors can contact you through email or text message

Debt collectors may attempt to reach you via email or text messaging. However, certain limitations apply.

If a debt collector reaches out to you through email, they must have your specific approval. Approval occurs when you reach out to a debt collector via your email address or when the original first-party creditor provides your email as an authorized form of contact.

However, if a debt collector contacts you via email, they must allow you to opt out of future communications with them. Their opt-out provision must be contained within the email and provide you with simple instructions to stop receiving electronic communications from the collection agency.

Similarly, a debt collector may also contact you via text message through your phone number. You must give them the approval to text you. If you choose not to communicate with them via text, they must stop sending you text messages.

Debt collectors can also contact you through social media accounts

Yes, a debt collector may attempt to reach you through your social media accounts. However, if they do so, they must abide by specific rules.

All messages sent by the debt collector must be private. They cannot leave messages on your social media posts that are viewable to your friends, family members, or other contacts.

If a debt collector contacts you via your social media account, they must correctly identify themselves. A debt collector can’t pretend to be your relative or an old acquaintance.

Debt collectors must provide you a way to opt out of their social media messages. They can’t continue to message you via these platforms if you ask them to stop.

Does the Debt Collection Rule change require debt collectors to provide disclosures?

Yes, several new disclosure rules pertain to debt collection agencies.

One of the most critical disclosures is the itemization date. If a consumer requests that the debt collection agency provide an itemized debt statement, the agency must do so. However, the debt collection agency must choose a beginning itemization date that coincides with one of the following:

  • The last statement given to the consumer by the original creditor
  • The transaction that led to the debt
  • The day the original creditor charged off the account
  • The final payment made by the consumer
  • The day a judgment was issued against the debtor

The debt collection agency must provide a complete list of all charges incurred since the itemization date.

In addition, the debt collector must include specific information that helps the consumer to identify the original creditor. For instance, the debt collector should include pertinent details like the initial account number and the name of the first-party creditor.

The Debt Collection Rule lists new rules about time-barred debt?

A time-barred debt includes debts that a debt collection agency cannot pursue via a lawsuit. Each state has a statute of limitations law that prevents creditors and debt collection agencies from pursuing cases after a specific time.

The statute of limitations varies by state and debt type. Typically, revolving debt and oral debt promises have shorter limitations. Debts involving promissory notes, like home and auto loans, have longer limitations. Limitations may vary anywhere between two and fifteen years.

Under the new provisions of the Debt Collection Rule, debt collection agencies cannot threaten legal action against you to collect a debt unless they have the right to do so.

For instance, if you owe a credit card debt that has passed a five-year limitation period, a debt collector cannot send you aggressive letters saying they will sue you. They can continue to try to collect the debt via phone calls and letters, but lawsuits are out of the picture.

Let’s look at an example.

Example: Ted, who lives in California, is receiving phone calls and emails from a debt collection agency called Midland Credit Management. He doesn’t remember the credit card debt they claim he owes, but they keep threatening to sue him if he doesn’t pay it off. After doing some research online, he finds out that the statute of limitations on credit card debt is four years in California. When Ted analyzes the debt documentation sent by Midland Credit Management, it’s clear that he hasn’t been active on the account for more than five years. This means that Midland Credit is in violation of the FDCPA for threatening to take legal action when they do not have the right to do so.

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When can a debt collector report my account to a credit reporting agency?

Debt collectors regularly report your account details to credit agencies until you pay off your debt or settle with the collection agency.

However, under the new Debt Collection Rule, creditors cannot immediately report your account to the credit bureaus. Instead, debt collection agencies must either speak to you or send a validation notice and wait for a certain period to elapse.

These agencies cannot report the account if they receive a non-delivery notice. Instead, the agency will need to attempt to locate you again. However, if the debt collection agency does not receive any response, it may report the account once 14 days pass.

Can debt collectors attempt to collect debts from individuals who pass away?

Yes, debt collectors may attempt to collect debts from deceased individuals. However, if the debt collector knows that the person died or has reason to believe they are no longer living, communications must go to the individual who acts on behalf of the debtor’s estate.

Any new debts that a debt collection agency acquires with deceased borrowers must go directly to the estate representative for validation. The debt collection agency must identify the estate representative by name in their letter.

How long do debt collectors have to retain records related to their debt collection attempts?

Debt collectors must adhere to record retention regulations. All records must comply with the FDCPA and the new Debt Collection Rule. Record retention begins the day the debt collector starts collection activity. Debt collection agencies must keep all documents for three years following the last communication with the borrower.

The Debt Collection Rule concerning record retention applies to all communications, including letters, emails, social media messages, texts, and recorded phone calls.

What happens if a debt collector violates my rights under the Debt Collection Rule?

You have rights if a debt collection agency fails to comply with the new Debt Collection Rule. Never accept abuse and harassment from a debt collector. You should report illegal actions to the Federal Trade Commission and the Consumer Financial Protection Bureau. Both agencies allow you to easily register complaints online.

If the violation breaks your state’s debt collection laws, you may report it to your Attorney General’s office. The Attorney General’s office will retain your complaint and may take action against the debt collection agency on your behalf.

You may sue the debt collection agency in court. If you win, the debt collection agency may owe you a penalty and will need to cover your expenses related to the case.

It’s also possible to use any violation against the debt collection agency to get a better deal on settling your debt. If you can prove their actions violated your rights, you may be able to negotiate a reduced settlement amount.

Respond to a debt collection lawsuit

More than 90% of people who get sued for debt lose their case automatically because they do not respond in time.

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As you draft your Answer document, focus on the following:

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To learn more about these three steps, watch this video:

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