Change of Law Regarding Collection of Consumer Debt
Author: Attorney Thomas J. Casey
The laws regarding collection of consumer debts have changed. Recently, the Consumer Financial Protection Bureau (CFPB) amended the regulations dealing with the Fair Debt Collections Practices Act (FDCPA). Debt collection notices must now give additional information and disclosure to consumers, which should make it much easier to determine the amount owed with a detailed explanation of interest and fees.
Under the previous law, debt collectors were to provide a “Debt Validation Notice” giving consumers information including:
- the amount of the debt;
- the name of the creditor to whom the debt is currently owed;
- a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assessed to be valid;
- a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector, and
- a statement that, upon the consumer’s written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. (15 U.S.C. § 1692g(a)).
All of the foregoing information was to have been provided in this “initial communication” with the debtor. With the changes from the new regulations, the initial communication will contain a debt validation notice which will include significantly more information and additional disclosures such as:
- the name and mailing information of the debt collector, consumer and actual creditor;
- the debt collector’s name and the mailing address at which the debt collector accepts disputes and requests for original creditor information; and
- the itemized amount of the debt reflecting interest, fees, payments, and credits since the itemization date, and the itemization date.
The new form of notice required by the changes in the law must include a tear-off dispute form with prompts for disputing the debt designed to be much easier for a consumer to clearly explain any dispute. The form must say “How do you want to respond?” and “Check all that apply” with the following language:
I want to dispute the debt because I think:
____ this is not my debt
____ the amount is wrong
____ other (please describe on reverse or attach additional information)
A copy of the new Debt Validation Notice can be viewed here: www.consumerfinance.gov/rules-policy/regulations/1006/2021-11-30/b/. If you receive any collection letters or contact from debt collectors, that does not follow these changes in the law, you may wish to contact an attorney immediately to determine your rights.