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FDCPA bans debt collectors from trying to collect stale debts

On April 26, 2023, the federal Consumer Financial Protection Bureau (CFPB) reinforced its official stance that debt collectors may not attempt to collect stale consumer debts. The agency did so in a new Advisory Opinion about this prohibition of the Fair Debt Collection Practices Act (FDCPA).

What is the purpose of the FDCPA?

The FDCPA is the federal consumer-protection law that regulates third-party consumer debt collectors to prevent abusive collection practices. In addition to prohibiting collection attempts of stale debts, it also provides other consumer protections such as:

  • Requiring that debt collectors identify themselves as such when contacting debtors
  • Regulating the hours within which collectors can contact debtors
  • Limiting collector contact with employers, relatives and friends of debtors
  • Forbidding threats, intimidation, lies, abusive language and similar behavior toward debtors to scare or pressure them
  • Regulating misrepresentations about the details or status of debts
  • Banning false threats of legal action against debtors or of arrest or criminal liability for debts
  • Requiring debt collectors to stop contacting debtors at work when the debtors make that request
  • Charging debtors with unauthorized, undisclosed fees
  • Requiring third-party debt collectors to tell targeted debtors about their right to dispute debts
  • Banning collectors from contacting debtors after debtors have officially requested the collection activity cease
  • And other protections

What does the Act say about stale debts?

The Act defines a “debt collector” as a party who “regularly collects or attempts to collect, directly or indirectly, [consumer] debts owed or due or asserted to be owed or due another.”

In the new Advisory Opinion, the CFPB affirms that the FDCPA bans third-party debt collectors from “suing or threatening to sue to collect a time-barred debt.” This prohibition applies “even if the debt collector neither knows nor should know that the debt is time barred.” In other words, a debt collector who tries to collect a time-barred (stale or expired) debt is “strictly liable” under the Act even if they did not know it was stale.

A “time-barred debt” means that its statute of limitations – or deadline for filing a lawsuit to enforce or collect it – has expired. State law usually establishes the statute of limitations for different classes of legal claims. On a basic level, the policy behind statute of limitations is that it is not desirable for parties to have lifelong liability for their actions, that there should be closure and that at some point the wronged party needs to either file a lawsuit or forfeit their right to do so.

Legal counsel advisable

The concept of a statute of limitations is legally complex, so any Virginian facing issues involving potentially stale debt should seek the advice and guidance of an experienced consumer lawyer. For example, it is not always clear when the statute of limitations begins to run, if something has caused it to retrigger or if the debtor could have unknowingly revived the debt.

An attorney can also assist with any issue related to the FDCPA’s debtor-protection rules or illegal third-party, debt-collector actions.