George Simons | October 19, 2022
Summary: Under the FDCPA, debt collectors must give disclosures about certain information surrounding a debt. Here is SoloSuit's guide on regulations on debt collection disclosures.
Disclosure is a common phrase used in various legal concepts and contexts. But regardless of the concept or context, this phrase means the release of new or confidential information. This article discusses the term ‘disclosure' when used in the context of debt collection cases..
The Fair Debt Collection Practices Act outlines how debt collectors interact with consumers when trying to recover a debt they supposedly owe. On June 30, 2021, the Consumer Financial Protection Bureau announced additional rules under the FDCPA. As a result, effective November 30, 2021, consumers were awarded more control over how debt collectors interact with them.
The CFPB also announced new guidelines for debt collection disclosures. The new regulations added three key elements:
Now, let's take a minute to break down each of these elements.
If you are contacted by a debt collector pursuing repayment for an alleged delinquent account, you have a right to ask for basic information concerning the alleged debt. In fact, there are statutory mandates requiring debt collectors to disclose important details about the debt to consumers, when requested.
According to the new rules, debt collectors:
It's important to note that the information described above is usually provided during a debt collector's initial communication. However, if the debt collector does not provide such information when they first contact you, they must provide it within five days. In this context, the phrase ‘initial communication' means the first time the debt collector contacts the consumer about the debt supposedly owed.
The law requires the debt collector to provide the validation notice in any of the following ways:
The new regulations require debt collectors to inform consumers about the protections they have under the new law. More specifically, collectors must inform consumers that they can find additional information about consumer protections during debt collection on the CFPB's website.
The debt collector must also disclose to the consumer that they can dispute the debt and provide ways to file the dispute. If they provide this information electronically, they must also provide a statement demonstrating how the consumer can dispute the debt electronically.
One of the most common affirmative defenses to a debt collection lawsuit is that the debt's statute of limitations has expired. When the statute of limitations has expired, most states prohibit debt collectors from threatening consumers with legal action to collect such debt. This is because they cannot legally collect a time-barred debt. But despite knowing this, some collection agencies threaten consumers with legal action, hoping they'll make a payment to the debt account, effectively reactivating the debt's statute of limitations.
In some states, when the statute of limitations on debt expires, the debt is considered invalid, effectively preventing any collection efforts. In other states, debt collectors may still attempt to collect the expired debt, but they cannot threaten consumers with legal action over such debt.
However, according to the new regulations, a debt collector must disclose any debt whose statute of limitations has expired on the front page of the validation notice. The disclosure could be something like:
“The law prohibits debt collectors from collecting old debt. Therefore, we will not sue you to collect this debt if you don't respond or speak to us about it. This is because this debt is too old. However, if you make any form of payment or acknowledge↚—in writing—that you owe this debt, we may be able to file a lawsuit against you to recover the debt.”
California is a good example of a state that requires disclosures for time-barred debts. Cities like New York also have this requirement.
The truth is, some debt collection agencies are driven by greed rather than the need to recover what you supposedly owe. Such rogue agencies will harass you to pay a debt you don't know anything about. In addition, debt accounts switch hands several times before landing on the desk of that particular debt collection agency that contacts you. So without verifying debts, many consumers end up paying debts they don't owe. The worst part is that once you agree to pay a debt, it confirms that you owe the amount. And, making a payment to an old debt automatically reactivates the debt even if its statute of limitations has expired.
If a debt collector has failed to disclose enough information about your debt, you can send them a Debt Validation Letter to formally request a debt verification. If the collector cannot verify the debt, they will probably stop contacting you about it. You can use SoloSuit to draft a Debt Validation Letter in minutes.
If the collector has already sued you for a debt, the first step to winning in court is to respond to the debt lawsuit with a written Answer. You have up to 35 days to respond, depending on which state you live in, before a default judgment is entered against you. With a default judgment, debt collectors can garnish your wages and put liens on your property. Responding to the lawsuit increases your chances of winning the case altogether and getting those collectors off your back.
To learn more about how to respond to a debt collection lawsuit, check out this video:
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.