October 20, 2016

Our Mini-Theme: Debt Collection and Bankruptcy

Donald S. Maurice

It has been nearly 40 years since the federal Fair Debt Collection Practices Act (15 U.S.C. § 1692) became law, providing a statutory framework for regulating third-party debt collection conduct. When originally enacted, the FDCPA did not provide any agency with rulemaking authority. As a result, the statute has gone largely unaltered. But the debt collection industry has dramatically changed with the emergence of debt buying entities and large-scale securitization of consumer debt. New technologies such as paperless transactions, the ubiquitous use of cell phones, text messaging, and even voice mail hardly mesh with the 1970’s-era FDCPA.

Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau was given authority to promulgate rules under the FDCPA and this summer the CFPB released an outline of what those rules may look like.

In this month’s mini-theme, Keith Wier and Eric Rosenkoetter provide their analysis of the CFPB’s outline. As they suggest, although the outline addresses rules for third-party debt collectors, rules are likely in the making that would regulate originating lenders’ debt collection conduct as well.

Also, Jolina Cuaresma, Katherine Lamberth, and Brent Yarborough examine existing federal regulation of lender debt collection activity, including recent enforcement actions foreshadowing what lender debt collection activity regulations may look like.

Finally, we examine the intersection of the FDCPA and bankruptcy law, particularly when debt collectors file proofs of claim for consumer debts subject to expired statutes of limitations. Over the past two years, four Circuit Courts of Appeals have rendered conflicting opinions—three finding there is no violation of the FDCPA. Just this past month, two petitions for certiorari were filed with the U.S.Supreme Court. Four more Circuit Courts of Appeals are still considering the issue. Our article explains the conflicting opinions and their impact on consumer bankruptcy law.

To explore these topics further, visit the Consumer Financial Services Committee home page at this link where ABA members can browse our archive of materials. Also, consider membership in the CFSC. Membership is free to all existing BLS members. The committee provides CLE presentations at the Business Law Section Annual and Spring Meetings and our own stand-alone meeting every January. The meetings provide a unique opportunity to network with attorneys deeply involved in all facets of consumer financial services law.

Donald S. Maurice

Donald S. Maurice
Chair, Bankruptcy and Debt Collection Subcommittee of the Consumer Financial Services Committee