Last week, Congressman Steve Cohen (TN-09) introduced a bill that would amend the Fair Debt Collection Practices Act (“FDCPA”) to prevent debt collectors from bringing legal action against consumers on debts after the statute of limitations has expired. According to the introduced legislation, the Fair Debt Collection Improvement Act (H.R. 3402), debt collectors who have purchased time-barred debt on the secondary market would be required to inform debtors that the debt collectors, and not the original creditor, now holds the debt. Debt collectors would also be required to notify debtors that the debt collector cannot sue for the debt and that if applicable by law, the statute of limitations on the entire debt could be restarted by any payment made towards the debt by the consumer.
The Fair Debt Collection Improvement Act was created to protect debtors from using the abusive and predatory tactics of debt collectors. This proposal would prevent debt collectors from deceiving consumers into paying more than they would be legally obligated to pay and from threatening legal repercussions since none are available. Congressmen Cohen commented in a press release: “Just like United States government, consumers should pay the debts they owe, but they still deserve protection from harassment and the abusive and predatory tactics used by some debt collectors.”
Currently, despite the fact that it is not explicitly illegal under the FDCPA, most courts hold that debt collectors may not bring legal action to collect on debts for which the statute of limitations has expired. However, the Fair Debt Collection Improvement Act clarifies the FDCPA by barring debt collectors from bringing legal action against consumers on a time-barred debt. The proposed legislation is cosponsored by Representatives Gwen Moore (WI-04), Eleanor Holmes Norton (DC), and John Conyers (MI-13).