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Comprehensive Debt Collection Improvement Act Would Protect Consumers from Predatory Practices

Thursday, May 13, 2021
Kiran Sidhu

WASHINGTON, D.C. – The United States House of Representatives today passed the Comprehensive Debt Collection Improvement Act (H.R. 2547).

Introduced by House Financial Services Committee Chairwoman Maxine Waters, the Act is comprised of eight bills that would collectively enact critical debt collection reforms aimed at protecting vulnerable consumers. If passed into law, the Act would, in part, prohibit the collection of medical debt for two years after a procedure, as well as prohibit credit reporting of debt arising from medically necessary procedures. It also would amend the Fair Debt Collection Practices Act (FDCPA) to expand and clarify coverage, including for all federal, state, and local debts collected by debt collectors.

In response, Kiran Sidhu, policy counsel at the Center for Responsible Lending (CRL), issued the following statement:

The protections offered to consumers in this bill are long overdue and particularly needed in the post-pandemic economy in which consumer debt has continued to grow, reaching $14.56 trillion at the end of 2020. By protecting consumers from unfair debt collection practices, this bill will tackle the racial injustice experienced by communities of color, where 39% experience debt collection, as opposed to 24% in white communities.

We’re thankful the Comprehensive Debt Collection Improvement Act is moving forward and urge the Senate to do its part to protect consumers.

Specifically, this bill would protect vulnerable consumers from abusive debt collection practices by:

  • Prohibiting the use of confessions of judgment as an unfair credit practice that eliminate notice and the right to be heard;
  • Prohibiting certain abusive collection practices directed at service members, including threats to reduce rank or revoke security clearance;
  • Requiring discharge of private student loans due to total and permanent disability;
  • Prohibiting collection of medical debt for the first two years and credit reporting of debt arising from any medically necessary procedures;
  • Requiring debt collectors to obtain consent before using electronic communications and provide written validation notices;
  • Adjusting statutory damages in the FDCPA for inflation and indexing them to index for inflation in the future; and
  • Clarifying FDCPA coverage for non-judicial foreclosures.

Additional Background

Prior to the pandemic, more than 68 million adults in the United States had one or more debts in collection on their credit report, which subjects them to harassing debt collection calls and potential lawsuits. Other groups particularly vulnerable to abusive debt collection practices include service members, older consumers, and those with limited English proficiency.

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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org