Debt Collection

Consumer Groups Dispute Proposed Debt Collection Rule

A new rule is being proposed by the Consumer Financial Protection Bureau (CFPB) that would require debt collectors to notify consumers as to whether they can be legally sued for a debt they are attempting to collect. This rule follows complaints made by consumers regarding debt collectors threatening to collect on debts that they otherwise would not be able to pursue legally.

Every state has statutes of limitation which control how long an individual or entity can bring a legal action. For collection of debt, this timeline in Florida is five years for debts resulting from written contracts, such as personal loans, and four years for oral contracts or revolving accounts, including credit cards. If a creditor contacts a consumer regarding a debt past that deadline, the consumer is not under any legal obligation to pay.

Currently, debt collectors are not under any legal obligation to inform the consumer on the other end of the phone that the debt they are pursuing is past the statute of limitations. In fact, many collectors hope that the consumer will not be wise enough to know this fact, in hopes that they will “revive” an otherwise dead debt and make it legally collectible.

Requiring debt collectors to inform the consumer that the debt is past the statute of limitations is one step in the right direction when it comes to protecting consumers, when it comes to reviving old debts. However, consumer advocacy groups, such as the National Consumer Law Center, believe the only way to truly protect the consumer is to put a complete ban on the collection of time-barred debts both in court and out of court.

Consumer protection advocates have expressed concerns regarding the language used in the proposed disclosures offered by the CFPB. They believe that the way the language is worded will only scare consumers even more into believing that they are being sued to collect on the old debt when, in fact, it is the opposite.

On the other hand, debt collectors are adamantly against a complete ban on time-barred debt. According to them, consumers are more than willing to pay off debts they owe that are past the statute of limitations. By banning collection on these debts, they argue that they are being denied this revenue. However, a great bulk of these payments are being made by individuals in protected groups, such as the elderly and medically fragile. Many of these individuals are not fully aware of their rights and are easily swayed by the persuasive tactics of debt collectors.

At this point, the rule is merely a proposed rule. The public has until August 4 to submit comments to the CFPB on the proposed rule. After that point, the agency will then decide whether to proceed with the proposed rule.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at

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