CFPB proposes making debt collectors disclose statute of limitations

Debt collectors would have to disclose they cannot sue to recover debt that has exceeded a statute of limitations under a proposal issued Friday by the Consumer Financial Protection Bureau.

The agency's supplemental notice of proposed rulemaking would require such a disclosure during a debt collector's initial contact with a consumer and on any required validation notice.

The proposal would require disclosures only if a debt collector “knows or should know” that the debt has exceeded the statute of limitations.

In May, the CFPB released a plan to overhaul the debt collection industry that would limit to seven calls per week how often debt collectors can call borrowers about unpaid debts.
In May, the CFPB released a plan to overhaul the debt collection industry that would limit to seven calls per week how often debt collectors can call borrowers about unpaid debts.

In May, the CFPB released a plan to overhaul the debt collection industry that would limit to seven calls per week how often debt collectors can call borrowers about unpaid debts. The proposal also would allow consumers to opt out of contact with debt collectors by voicemail, email and text messages.

The debt collection proposal, which has not been finalized, also would prohibit collectors from suing or threatening to sue on debts they know or should know are time-barred, the CFPB said.

“The Bureau included the 'know or should know' standard in its proposal recognizing the concern that, in some instances, debt collectors may be genuinely uncertain whether the statute of limitations has expired even after undertaking a reasonable investigation,” the CFPB said in a press release. The bureau said that “given that the analysis is ongoing, the supplemental NPRM also proposes that standard.”

The supplemental proposal includes model language and forms that debt collectors could use to comply with the proposed disclosure requirement.

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