August 4, 2020
Director Kathleen Kraninger
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
Re: Proposed Time-Barred Debt Disclosures, Docket No. CFPB-2020-0010 or RIN 3170-AA41
Dear Director Kraninger:
The undersigned Military and Veteran Service Organizations write to express concern about the Consumer Financial Protection Bureau (CFPB)’s supplemental debt collection rulemaking proposed disclosures for consumers when debt collectors attempt to collect after the statute of limitations (the deadline to sue) has expired.
The CFPB previously proposed rules to prohibit lawsuits or the threat of lawsuits on time-barred debt if debt collectors knew or should have known that the debt is time-barred. The Bureau’s new supplemental proposal govern debt collectors who attempt to collect out of court, requiring them to make disclosures if they know or should know that the debt is time-barred. We are worried that these proposed disclosures merely provide a road map for debt collectors to collect on debt that has passed its statute of limitations, rather than to protect military and veteran consumers, their families or survivors.
The Bureau’s proposed model disclosures are:
- Debt Cannot Be Revived: The law limits how long consumers can be sued for a debt. Because of the age of this debt, debt collectors cannot sue consumers for it.
- Debt Revived by Payment or Written Acknowledgement: The law limits how long consumers can be sued for a debt. If consumers do nothing or speak to the debt collector about this debt, the debt collector will not sue to collect it. This is because the debt is too old. Importantly, however, if consumers make a payment or acknowledge in writing that they owe this debt, then the debt collectors can sue to collect it.
- Debt Revived by Payment: The law limits how long consumers can be sued for a debt. If consumers do nothing or speak to debt collectors about this debt, the debt collectors will not sue to collect it. This is because the debt is too old. Importantly, however, if consumers make a payment, then the debt collector can sue to collect it.
- Debt Revived by Written Acknowledgement: The law limits how long consumers can be sued for a debt. If consumers do nothing or speak to debt collectors about this debt, the debt collectors will not sue to collect it. This is because the debt is too old. Importantly, however, if consumers acknowledge in writing that they owe this debt, then the debt collectors can sue to collect it.
We are concerned that these disclosures will not adequately protect military-connected consumers who will not understand why they are being contacted about a debt that is too old to sue on or how making a small payment or acknowledgement could end up reviving the statute of limitations on a debt. Debt collectors will be able to comply with the letter of the disclosure requirements while still pressuring vulnerable veterans and other military consumers in a way that limits the likelihood they will be protected by such disclosures.
The only way to prevent abuses from taking place is to ban all collection of time-barred debt in and out of court in order to protect all consumers from abusive collection of time-barred debt. We strongly urge the Bureau to ban all collection of time-barred debt. At a bare minimum, we urge the Bureau to prohibit lawsuits on revived debts and limit collections of time-barred debts to only written communications to maximize protections for vulnerable veterans.
CFPB’s own numbers indicate that, in consumer testing, 35% of those who participated did not understand the time-barred debt disclosure. In 2018, roughly 71 million out of 224 million American consumers, or about 31%, had a debt reported to a credit rating agency. It stands to reason that a majority of the people who are directly affected by these disclosures will not understand the time-barred debt disclosure. Many military-connected consumers tend to live in the South. The fact that states like Texas and South Carolina have the highest proportions of Americans with debt in collections in the country means this is an especially important rule to get right for those communities.
Lastly, CFPB needs to require a time-barred debt disclosure in every communication, not just the first two. Two disclosures – coming days, weeks, or months apart – does not guarantee that a consumer understands what is being told to them, as shown above. If a debt collector wrongly tells a veteran their debt is time-barred, that should bind all future collection attempts as time-barred. This will incentivize debt collectors to do their due diligence and actually determine whether a debt is time-barred or not.
Veterans Education Success
 Available at: https://www.federalregister.gov/documents/2020/03/03/2020-03838/debt-collection-practices-regulation-f#p-258 (last visited July 14, 2020).
 Available at: https://www.urban.org/urban-wire/71-million-us-adults-have-debt-collections (last visited July 14, 2020).