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New Debt Collection Laws 2022

Sarah Edwards | November 02, 2022

Debt collectors in 2022 ^^

Summary: In 2022, changes to debt collection laws increased your rights as a consumer and made it easier for you to protect yourself from unfair debt collectors. These changes include updates to the Consumer Financial Protection Bureau’s Debt Collection Rule, the enactment of New York’s Consumer Credit Fairness Act, and the new No Surprises Act which focuses on medical debt. If you’ve been sued for a debt, knowing the new debt collection laws in 2022 will help you have a better chance at fighting back. Use SoloSuit to respond to your lawsuit and increase your chances of winning.

If you’re concerned about your debts, it’s essential that you stay on top of new legislation changing the landscape of debt collection and consumer rights. SoloSuit’s got you covered. Here are the debt collection laws that may impact you in 2022 and beyond.

Unpacking the Consumer Financial Protection Bureau’s Debt Collection Rule

Perhaps the most significant change to debt collection practices affecting all consumers nationwide is the Consumer Financial Protection Bureau’s (CFPB) Debt Collection Rule. Legislation of this kind has long been awaited by consumers and policymakers seeking to curb abusive and harassing debt collection tactics, and it promises to make several critical changes.

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Initial disclosures concerning debt

Debt collection agencies have historically provided very little information in their initial letters to consumers with outstanding obligations. The first letter from a debt collector typically includes the amount due, basic account information, and ways to contact the agency to arrange payment.

The new Debt Collection Rule requires debt collection agencies to include much more information in their initial Collection Letter. It’s designed to make it easier for customers to understand the precise financial obligation a Collection Letter pertains to. Details that a debt collection agency must include in its initial communication under the new rule include:

  • The contact information of the debt collector
  • The name and account number of the original creditor
  • An itemized list of current debts, including any additional charges since a specific time (like the charge-off date)
  • Details on how to further verify or dispute the obligation

In addition to these details, the notice must also include a form that the consumer may return to the debt collector to dispute the debt.

Limits on contact with the consumer

Many people associate debt collectors with harassing and abusive phone calls that don’t stop until the consumer takes action to repay the debt. The Debt Collection Rule limits the contact a debt collector can make with consumers. Examples of such limitations include:

  • No calls before 8 a.m. or after 9 p.m. in the consumer’s time zone
  • No subsequent contact with the consumer for seven days following a conversation with them
  • No more than seven phone calls per week
  • Collectors may email consumers using contact information from the original creditor but must provide a straightforward way to opt out of further email communications
  • Collectors may contact consumers via social media but must introduce themselves properly and stop further contact if the consumer requests it
  • Collectors cannot leave voicemails indicating that their call concerns a debt held by a debt collection agency
  • Collectors may send the consumer text messages but must provide a clear way to opt-out of further text communication

The Debt Collection Rule aims to make communication with debt collectors streamlined and non-abusive. If the collector violates these provisions, they may be subject to fines and other legal actions.

Credit reporting limitations

Once a debt collection agency purchases a debt from a creditor, they can’t report the purchase to the credit reporting bureaus until they either speak with you directly or send a letter. If the communication occurs via email or letter, they can only report the debt after 14 days.

Time-barred debts

Debt collection agencies may not threaten legal action against the consumer if their debt has passed the statute of limitations. They can’t threaten to file a lawsuit against the consumer, garnish their wages, or seize their property unless they explicitly have the right to do so.

The statute of limitations is the deadline that a creditor or debt collector has to sue someone for a debt. The clock generally starts on the date of the last activity on a debt account, which usually means the date of the last payment made.

Each state has a different statute of limitations. Investigate the statute of limitations on your debt before you agree to make any payments to a debt collector.

Communications with deceased customers

Additionally, the Debt Collection Rule makes it harder to collect debts from deceased consumers. Under the new legislation, the debt collection agency must cease communication with the deceased party if they know or have a reason to believe that the person has passed away.

If the agency continues its collection attempts with the individual’s estate, their letters must go to the person handling their financial and personal affairs. Furthermore, debt collection agencies must identify the estate administrator by name.

Record retention

Under the new rules, if a debt collection agency records a phone call with you, they must retain the recording for three years and save the recording in compliance with record retention policies.

Exploring the ins and outs of New York’s Consumer Credit Fairness Act

The state of New York recently implemented new rules that apply to debt collection agencies seeking to collect overdue accounts from consumers. The restrictions apply only to consumer debt, not business debt. The Consumer Credit Fairness Act (CCFA) features several key provisions.

Changes to the statute of limitations

Previously, the statute of limitations for consumer debt was six years in New York. The CCFA shortens it to three years.

The CCFA also stops debt collection agencies from restarting the statute of limitations if a consumer makes a payment on a debt or acknowledges they owe the money. The rule constitutes a massive victory for consumers since debt collection agencies can no longer take advantage of their goodwill to extend the time to collect on a debt.

Protection from Summary Judgments

In the past, many consumers were left with default judgments simply because they weren’t aware that a creditor filed legal action against them in court.

Their failure to appear for the court date negated any defense they may have had. In their absence, a court would issue a Summary Judgment the plaintiff could use to pursue further collection activities against them.

Under the new CCFA legislation, all debt collection agencies must send their notices of a lawsuit to the court. The court will contact the consumer via a written message that includes specific information, such as:

  • The contact information of the original creditor
  • Advisement to file an Answer against the lawsuit as quickly
  • as possible
  • Website links to New York Law Help or
  • A general statement describing what might happen if you don’t respond

The notice provided by the court must be in both English and Spanish. If the letter is undeliverable, the judge may not issue a default judgment in your absence.

Lawsuit Documentation

The CCFA establishes specific rules that debt collection agencies must follow if they file a lawsuit against you to collect an obligation. The collector must include certain essential information in the suit, such as:

  • The contact information of the original creditor and the customer’s account number
  • The most recent monthly statement from the original creditor showing a transaction such as a purchase or payment
  • The date and amount of the most recent payment on the account
  • A complete itemization of the amount owed, including principal, interest, collection costs, and attorney charges

Third-party debt collectors must provide proof that they own the debt. The evidence must be clear and establish an entire debt ownership chain, including any previous assignments from other debt collection agencies.

Introducing the No Surprises Act

Many consumers struggle with unexpected medical bills. Sometimes referred to as “surprise medical bills,” these invoices typically occur when a consumer undergoes emergency treatment at a hospital or uses an out-of-network medical provider. Surprise medical bills are also common for helicopter ambulatory services.

Under the No Surprises Act, medical providers can’t use surprise billing for emergency services. Instead, they must charge in-network prices, even if you don’t have pre-authorization from your insurance agency.

If you don’t have insurance, medical providers must give you an estimate for the cost of your care. Their estimate must include reasonable services you’re likely to require. If the final cost of your treatment is more than $400 higher than the good faith estimate, you can dispute the bill.

The No Surprises Act intends to protect consumers from unforeseen medical bills. According to the Journal of the American Medical Association, one in five consumers received a surprise medical bill in the past two years, and 67% of Americans cite unexpected medical expenses as their worst financial fear.

The No Surprises Act should reduce the number of annual medical bills that go into collection.

Setting new rules for reporting consumer medical debt

All three major credit reporting bureaus agreed to remove paid medical debts from consumer credit reports beginning in July 2022. Under the new rules, fully paid medical debt will be removed from the reports, even if the debtor paid it late. In addition, medical providers cannot report unpaid medical debts to credit bureaus until they’ve been overdue for one year or longer.

Further changes to medical debt reporting will occur in 2023. Beginning in the first half of 2023, credit reporting bureaus will remove all paid and unpaid medical debts of less than $500 from credit reports.

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What happens if a debt collector violates the provisions of the CFPB’s Debt Collection Rule?

You can file a complaint with the FTC if a debt collector violates your rights under the Debt Collection Rule. The FTC will review the circumstances of your complaint and attempt to come to a resolution with the debt collector.

The FTC may take legal action against a debt collector, especially if they note a similar pattern of consumer complaints.

You might also have the option of suing the debt collector for their abusive or harassing actions. Anytime a debt collector violates the rules of the FDCPA regulations concerning debt collection, they’re subject to a $1,000 penalty. If you file a lawsuit against the collector, you may also recover the costs of your legal expenses.

Respond to your debt lawsuit and stand up for your rights

If you’ve been sued for a debt, the best way to beat collectors in court is to respond to the lawsuit and stand up for your rights. Make sure to respond with a written Answer before your state’s deadline.

Follow these steps to make your Answer to a debt collection lawsuit:

  1. Respond to each claim listed on the Complaint.
  2. Assert your affirmative defenses.
  3. File the Answer with the court, and send a copy to the opposing party.

SoloSuit can help you draft and file an Answer in all 50 states.

Check out this video to learn more about these three steps:

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