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The Key Acts And ABA Policy Involving Debt Collection And Litigation Management

You can either consolidate your debts or go for a negotiation with your creditors for debt settlement and even file for bankruptcy when you find that you current debts are beyond your management abilities. However, irrespective of the road you choose for debt relief, you will need to make sure of the following:

  • You should act according to the set law or face legal consequences
  • Just like you the creditors or the third party debt collectors abide by the law as well
  • Choose an option that is most suitable for your given financial condition
  • Check out both debt settlement and debt consolidation reviews and
  • Not damage your credit in any way.

There are lots of laws and Acts designed by the government to keep you protected from any unfair practices while you are granted a loan or during collection process in case you fall behind your scheduled repayment.

The basic protection for the debtors and creditors however could not be covered by the by the original Fair Debt Collection Practices Act and therefore time and again this along with the other Acts and laws underwent several changes and reforms.

The FDCPA reforms

As per the FDCPA there are a few specific changes noticed in its status and other key points which are aimed at providing more protection to the consumers. However, it was not an easy process and certainly not a smooth ne to bring in these reforms.

  • The original version of the Practice of Law Technical Clarification Act as H.R. 1849 was introduced on April 7, 2017 by Rep. Dave Trott.
  • This was then referred to the House Financial Services Committee. This Subcommittee on Financial Institutions and Consumer Credit then held hearing on it and six other different bills on September 7, 2017.
  • It was during this hearing that the former senior Federal Trade Commission official Anne Fortney testified in favor of this bill and on the other hand, Ms. Chi Chi Wu the Staff Attorney of the National Consumer Law Center voiced opposition.
  • On November 16, 2017, the ABA sent a letter to House Financial Services and Judiciary Committees extending support for the legislation. In addition to that the NCBA, the Commercial Law League of America, the Receivables Management Association and other stakeholders also agreed to support H.R. 1849.
  • When Rep. Trott declared that he will not seek reelection it was then that the legislation was reviewed and was reinstated by Reps. Mooney and Gonzalez on December 5, 2017.
  • However, they first changed it to H.R. 4550 and then to H.R. 5082 again on February 23, 2018. Both these changed versions of the bill were then sent to the House Financial Services Committee.
  • On March 19, 2018, the ABA wanted all members of the House Financial Services and Judiciary Committees, RMA, NCBA and other groups to support H.R. 5082 and sent a letter regarding this so that the bill can be passed promptly.
  • Eventually, the House Financial Services Committee approved and marked up the bill by a vote of 35-25 on March 21.

However, before the voting took place, Rep. Alex Mooney made a statement to explain the need for such legislation and touted the strong support of ABA for the bill. In addition to that, Reps. Gonzalez and Trott as well as Chairman Jeb Hensarling also expressed their favor for the bill but Rep. Stephen Lynch raised opposition.

It is only when the Committee approved the bill, the ABA sent all state and local bar leaders a Legislative Action Alert on April 3, 2018. It also sent out another Action Alert on October 24 wherein they urged all of them to contact the Members of Congress so that they can show their support to the legislation.

The current scenario of H.R. 5082 as of now is that it is pending before the full House. There is a fair possibility of a floor vote before the 115th Congress adjourns. Therefore, the ABA sent a new letter to every Member of the House on September 19 to show their support to pass the bill soon.

Apart from that, the ABA has also sent Grassroots Action Alert and a Toolkit to several of its members on November 8 urging them to communicate with their Members of Congress to show support for the legislation.

The ABA policy

It may seem to you why The ABA is so keen on gaining everyone’s support for H.R. 5082 so that Congress may enact the legislation as soon as possible. This is because of the ABA policy.  

The ABA believes in many significant points that it wants to uphold such as:

  • The principal regulation and oversight of the legal business should remain with the state court of highest appellate authority
  • The attorney must be licensed from this court
  • The responsibility must not be vested on the federal agencies or Congress
  • Courts are the best machinery that can fulfill this important function.

The ABA also believes that when others support this legislation it will help in preserving the regulation and oversight of the traditional state court for legal profession and will not need further clarification from the FDCPA or the CFPB’s regulatory authority that are under the Dodd-Frank Act. This will help in better governing and control on the litigation activities of the creditor attorneys.

They also believe that this legislation will help in judicial regulation of admission requirements, disciplinary rules and ethical codes and that may also include disbarment and potential suspension. This will eliminate the chances of any conflict regarding the regulation between CFPB, Congress or other agencies of the judicial branch of government.

To sum up

Though FDCPA is supposed to be very helpful in debt collection and litigation management the scope of it seems to be marginally narrowed. This is because it will only exempt the creditor attorneys from engaging in litigation activities and will not create a broad exemption for all those attorneys who are engaged in non-litigation debt collection activities.

With H.R. 5082 in place it will apply to all involved in extrajudicial collection activities such as phoning the debtors or demand letters.