A invoice proposed by House Democrats would radically reform laws regulating debt collectors and provide further relief to private student loan borrowers.
The legislation, known as the Comprehensive Debt Collection Improvement Act (HR 2547), would provide a remedy for consumers and debtors tracked down by collection agencies. Some of the highlights include the following:
- Allows higher damages under the Fair Debt Collection Practices Act (FDCPA) for abuses by debt collection agencies that engage in unfair and deceptive practices.
- Requires debt collection agencies to obtain consumer authorization before using emails or text messages to collect overdue debts.
- Prohibits debt collectors from threatening military service members with reductions in rank or revocation of security clearance.
- Provides a two-year grace period before collection of medical debts can begin.
- Allows private student loan borrowers to pay off their loans on the basis of total and permanent disability. Currently, this option is only available by law for federal student loan borrowers.
The Fair Debt Collection Practices Act for (FDCPA) is a decades-old law that prohibits unfair, abusive and deceptive practices by debt collection agencies such as excessive phone calls, embarrassing communications to third parties, and misrepresentation regarding the legal rights or obligations of a debtor. . But in many cases, the law provides only a modest financial recovery for consumers; the statutory damages provision was significantly updated over forty years ago. The new legislation would increase damages for consumers harmed by debt collection practices.
Representative Madeleine Dean (D-PA), co-sponsor of the bill, had previously advocated for the release of private student disability loans for both borrowers and co-signers, and was able to include her separately tabled bill dealing with this issue in the new comprehensive legislation. . “A voter drew our attention to this issue (…) her daughter had become totally disabled and she had the balance of her private student loans left as a co-signer,” she said in a statement last month . “The lending company said it would cancel the loan for the borrower, but not for the co-signer.” Dean said reform was needed to “ensure that student loan borrowers are protected in these dire circumstances.”
The House is expected to vote on the bill this week. His fate in the Senate, however, is uncertain.
The Comprehensive Debt Collection Improvement Act is co-sponsored by Representatives Gregory W. Meeks (D-NY), Madeleine Dean (D-PA), Emanuel Cleaver (D-MO), Nydia M. Velazquez (D-NY), Jake Auchincloss ( D-MA), Ayanna Pressley (D-MA) and Rashida Tlaib (D-MI).
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