House Passes Comprehensive Debt Collection Improvement Act That Would Expand Multiple Consumer Finance Laws

Last week, the U.S. House of Representatives passed a bill, H.R. 2547, on a strict party-line vote. Titled "The Comprehensive Debt Collection Improvement Act, the bill would amend several consumer finance statutes for the first time in decades and impose new requirements and limitations on debt collectors, among others. Its fate now rests in the U.S. Senate.

The bill includes amendments to multiple existing debt collection statutes, including the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act, Truth in Lending Act, and Consumer Financial Protection Act. Notably, the bill would:

• Limit email, text message, and other electronic communications by debt collectors
  • For example, prior consent is required to contact a debtor by email or text message. The rulemaking authority of the CPPB is also restricted to prevent future authorization of unlimited use of such communications.
• Require the discharge of private student loans upon a borrower's death or total and permanent disability
• Restrict the collection and credit reporting of medical debt
• Regulate debt collection communications with servicemembers
• Install regulations for debt owed to federal agencies that is sold or transferred to debt collectors.
• Ban confessions of judgment
• Adjust damages recoverable under the FDCPA for inflation and expressly permit courts to award injunctive relief
• Expand the FDCPA to cover law firms handling non-judicial foreclosures

With the Senate split 50-50 between Democrats and Republicans, it is unclear whether this bill will pass into law, and if it does, in what form. Debt collectors, loan servicers, attorneys, and others subject to these statutes should closely monitor this legislation for any new requirements and prohibitions.