The Debt Collection Market and Selected Policy Issues

Changes from August 5, 2020 to October 15, 2020

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The Debt Collection Market and Selected
~~August 5~~October 15, 2020 , 2020
Policy Issues
Cheryl R. Cooper
When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation
Analyst in Financial Analyst in Financial
rather than the lender to whom the debt is originally owed. The debt collection market helps rather than the lender to whom the debt is originally owed. The debt collection market helps
Economics Economics
lenders recoup their losses when a consumer defaults, generally making consumer credit and lenders recoup their losses when a consumer defaults, generally making consumer credit and

other related markets more efficient. When lenders can effectively recoup their losses, they may other related markets more efficient. When lenders can effectively recoup their losses, they may
be more willing to lend to consumers at lower initial loan costs, leading to more access to credit be more willing to lend to consumers at lower initial loan costs, leading to more access to credit

for consumers. for consumers.
The U.S. debt collection market is large, and the debt collection process impacts many American consumers. As of 2019, The U.S. debt collection market is large, and the debt collection process impacts many American consumers. As of 2019,
there are over 7,000 collection agencies in the United States, and the industry’s annual revenue is about $12.7 billion. there are over 7,000 collection agencies in the United States, and the industry’s annual revenue is about $12.7 billion.
According to a Consumer Financial Protection Bureau (CFPB) survey, approximately one-third of consumers with a credit According to a Consumer Financial Protection Bureau (CFPB) survey, approximately one-third of consumers with a credit
bureau file reported being contacted by at least one creditor or debt collector trying to collect on one or more debts in the bureau file reported being contacted by at least one creditor or debt collector trying to collect on one or more debts in the
previous year. previous year.
Lenders make contracts with debt collectors to collect their debts, and consumers may not choose the debt collector with Lenders make contracts with debt collectors to collect their debts, and consumers may not choose the debt collector with
whom they engage. Therefore, consumers cannot take their business elsewhere if abuses occur. For this reason, consumer whom they engage. Therefore, consumers cannot take their business elsewhere if abuses occur. For this reason, consumer
protection laws and regulations may be particularly consequential. According to the CFPB, debt collection is the consumer protection laws and regulations may be particularly consequential. According to the CFPB, debt collection is the consumer
finance market with the second most complaints, accounting for 21% of the total complaints the agency received in 2019. finance market with the second most complaints, accounting for 21% of the total complaints the agency received in 2019.
Consumers’ most common debt collector complaints assert that a debt collector attempted to collect a debt the consumer did Consumers’ most common debt collector complaints assert that a debt collector attempted to collect a debt the consumer did
not believe was owed (45%), or a consumer received insufficient written notification about a debt (18%). not believe was owed (45%), or a consumer received insufficient written notification about a debt (18%).
The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal statute regulating the The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal statute regulating the
consumer debt collection market. It generally applies only to debt collectors, not the original lender. The FDCPA prohibits consumer debt collection market. It generally applies only to debt collectors, not the original lender. The FDCPA prohibits
debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect
certain personal, family, or household debts from consumers and grants consumers the right to dispute or stop some certain personal, family, or household debts from consumers and grants consumers the right to dispute or stop some
communications about an alleged debt. In addition, the FDCPA requires that a debt collector must send to a consumer a communications about an alleged debt. In addition, the FDCPA requires that a debt collector must send to a consumer a
validation notice disclosing certain information about the debt. validation notice disclosing certain information about the debt.
Recently, the CFPB has been actively engaged in rulemaking intended to clarify and update provisions in the FDCPA. On Recently, the CFPB has been actively engaged in rulemaking intended to clarify and update provisions in the FDCPA. On
May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking for the debt collection market, which generally seeks to May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking for the debt collection market, which generally seeks to
clarify how debt collectors should communicate with consumers. The proposed regulation would limit debt collector phone clarify how debt collectors should communicate with consumers. The proposed regulation would limit debt collector phone
calls to seven times during a seven-day period and would prohibit debt collectors from making calls within a week after calls to seven times during a seven-day period and would prohibit debt collectors from making calls within a week after
speaking by phone to a consumer. It would also specify that debt collectors can use newer technologies, such as email, speaking by phone to a consumer. It would also specify that debt collectors can use newer technologies, such as email,
voicemail, and text messages, to provide limited content messages to consumers. Debt collectors would be able to use these voicemail, and text messages, to provide limited content messages to consumers. Debt collectors would be able to use these
communication tools without limit, but consumers would have the right to request convenient times or places or restrict the communication tools without limit, but consumers would have the right to request convenient times or places or restrict the
communication medium (e.g., opt out of text messages). In addition, the proposed rule would specify what information debt communication medium (e.g., opt out of text messages). In addition, the proposed rule would specify what information debt
collectors should disclose to consumers, such as certain information about the debt, as well as consumers’ rights in the debt collectors should disclose to consumers, such as certain information about the debt, as well as consumers’ rights in the debt
collection process (e.g., how to dispute a debt). collection process (e.g., how to dispute a debt).
Appropriate regulation of the debt collection market has been a focus of congressional attention in the 116th Congress. Appropriate regulation of the debt collection market has been a focus of congressional attention in the 116th Congress.
Ongoing concerns about debt collection include communication frequency; time-barred and obsolete debt; validation issues; Ongoing concerns about debt collection include communication frequency; time-barred and obsolete debt; validation issues;
medical debt and credit reporting; and federal, state, and local government debt. The House Financial Services Committee medical debt and credit reporting; and federal, state, and local government debt. The House Financial Services Committee
held a hearing on the debt collection market in September 2019. The House passed H.R. 5003, the Fair Debt Collection held a hearing on the debt collection market in September 2019. The House passed H.R. 5003, the Fair Debt Collection
Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and ordered to be reported seven Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and ordered to be reported seven
other bills relating to the debt collection market: H.R. 3948, H.R. 4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and other bills relating to the debt collection market: H.R. 3948, H.R. 4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and
H.R. 5330. H.R. 5330.
In response to the Coronavirus Disease 2019 (COVID-19) In response to the Coronavirus Disease 2019 (COVID-19) pandemic, the House also passed pandemic, the House also passed two versions of the Heroes~~the HEROES~~ Act (H.R. 6800 Act (H.R. 6800).
~~Section 110402~~ and H.R. 925). Both bills would, among other things, ban debt collectors from collecting on a debt (such as garnishment or seizing would, among other things, ban debt collectors from collecting on a debt (such as garnishment or seizing
bank account assets), enforcing a security interest (such as repossession or foreclosure), or threatening to take an bank account assets), enforcing a security interest (such as repossession or foreclosure), or threatening to take an ~~a ction~~action on a on a
debt during the COVID-19 pandemic and for 120 days debt during the COVID-19 pandemic and for 120 days ~~afterwards. Section 110402~~afterward. Both bills also would ban debt collectors from also would ban debt collectors from
charging additional fees and interest on debts that become past due during this period. charging additional fees and interest on debts that become past due during this period.
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~~hen~~Introduction When a consumer defaults on a debt, a a consumer defaults on a debt, a third-party debt collector or buyer (hereinafter debt collector or buyer (hereinafter
referred to as “debt collector”) often collects the debt obligation, rather than the referred to as “debt collector”) often collects the debt obligation, rather than the first-
W partyparty creditor or lender to whom the debt is creditor or lender to whom the debt is ~~originaly~~originally owed. The debt collection owed. The debt collection
market helps lenders recoup their losses when a consumer defaults, facilitating the resolution of market helps lenders recoup their losses when a consumer defaults, facilitating the resolution of
delinquencies and defaults and making consumer credit and other related markets more efficient. delinquencies and defaults and making consumer credit and other related markets more efficient.
The U.S. debt collection market is large, and it impacts many consumers. As of 2019, there The U.S. debt collection market is large, and it impacts many consumers. As of 2019, there ~~are~~were
over 7,000 collection agencies in the United States, and the industry’s annual revenue over 7,000 collection agencies in the United States, and the industry’s annual revenue iswas about about
$12.7 $12.7 ~~bil ion~~billion.1 According to a Consumer Financial Protection Bureau (CFPB) survey, .1 According to a Consumer Financial Protection Bureau (CFPB) survey,
approximately one-third of consumers with a credit bureau file reported being contacted by at approximately one-third of consumers with a credit bureau file reported being contacted by at
least one creditor or debt collector trying to collect on one or more debts in the previous year.2 least one creditor or debt collector trying to collect on one or more debts in the previous year.2
Lenders make contracts with debt collectors to collect their debts, and consumers may not choose Lenders make contracts with debt collectors to collect their debts, and consumers may not choose
the debt collector with whom they engage. Therefore, consumers cannot take their business the debt collector with whom they engage. Therefore, consumers cannot take their business
elsewhere if abuses occur. For this reason, consumer protection laws and regulations are elsewhere if abuses occur. For this reason, consumer protection laws and regulations are
particularly important.3 According to the CFPB, debt collection is the consumer finance market particularly important.3 According to the CFPB, debt collection is the consumer finance market
with the second most complaints, accounting for 21% of the total complaints the agency received with the second most complaints, accounting for 21% of the total complaints the agency received
in 2019.4in 2019.4
The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal The Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692p) is the primary federal
statute regulating the consumer debt collection market. It statute regulating the consumer debt collection market. It ~~general y~~generally applies only to debt applies only to debt
collectors, not the original lender. In recent years, the CFPB has been actively engaged in collectors, not the original lender. In recent years, the CFPB has been actively engaged in
rulemaking to clarify and update provisions in the FDCPA and in debt collection markets.rulemaking to clarify and update provisions in the FDCPA and in debt collection markets.
Appropriate regulation of the debt collection market has been a focus of congressional attention Appropriate regulation of the debt collection market has been a focus of congressional attention
in the 116th Congress. The House Financial Services Committee held a hearing on the debt in the 116th Congress. The House Financial Services Committee held a hearing on the debt
collection market in September 2019.5 The House passed H.R. 5003, the Fair Debt Collection collection market in September 2019.5 The House passed H.R. 5003, the Fair Debt Collection
Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and Practices for Servicemembers Act, on March 2, 2020. In addition, the committee marked up and
ordered to be reported seven other ordered to be reported seven other ~~bil s~~bills relating to the debt collection market: H.R. 3948, H.R. relating to the debt collection market: H.R. 3948, H.R.
4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and H.R. 5330. 4403, H.R. 5001, H.R. 5013, H.R. 5021, H.R. 5287, and H.R. 5330.
This report first provides an overview of the debt collection market, including consumer This report first provides an overview of the debt collection market, including consumer
experiences during the debt collection process. experiences during the debt collection process. ~~Then, the report~~It then discusses the FDCPA, including discusses the FDCPA, including
the CFPB’s ongoing rulemaking. Lastly, the report discusses selected policy issues pertaining to the CFPB’s ongoing rulemaking. Lastly, the report discusses selected policy issues pertaining to
debt collection: communication frequency; time-barred and obsolete debt; validation issues; debt collection: communication frequency; time-barred and obsolete debt; validation issues;
medical debt and credit reporting; and federal, state, and local government debtmedical debt and credit reporting; and federal, state, and local government debt. Table A-1 in the in the

1 Rohan Jaura, 1 Rohan Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, Industry Report 56144, December 2019, p. 4World, Industry Report 56144, December 2019, p. 4
(hereinafter Jaura, (hereinafter Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019). World, 2019).
2 Consumer Financial Protection Bureau (CFPB), 2 Consumer Financial Protection Bureau (CFPB), Consumer Experiences with Debt Collection: Findings from the
CFPB’s Survey of Consumer Views on Debt, January 2017, p. 5, at https://files.consumerfinance.gov/f/documents/, January 2017, p. 5, at https://files.consumerfinance.gov/f/documents/
201701_cfpb_Debt201701_cfpb_Debt -Collection-Survey-Report.pdf (hereinafter CFPB, -Collection-Survey-Report.pdf (hereinafter CFPB, ~~Consum er~~Consumer Experiences with Debt Collection). ).
3 For an overview of consumer financial markets, see CRS 3 For an overview of consumer financial markets, see CRS Report R45813, Report R45813, An Overview of Consumer Finance and
Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
4 CFPB, 4 CFPB, Consumer Response Annual Report: January 1 – -December 31, 2019, March 2019, p. 9, at , March 2019, p. 9, at
https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf (hereinafter CFPB, https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf (hereinafter CFPB,
~~Consum er~~Consumer Response Annual Report). ).
5 For more information on the hearing, see U.S. Congress, 5 For more information on the hearing, see U.S. Congress, House Committee on Financial Services,House Committee on Financial Services, Examining
Legislation to Protect ~~Consum ers and Sm all~~Consumers and Small Business Owners ~~from~~ from Abusive Debt Collection Practices, 116th Cong., 1st , 116th Cong., 1st
sess.,sess., September 26, 2019 (Washington, DC: GPO, 2019), at https://financialservices.house.gov/calendar/September 26, 2019 (Washington, DC: GPO, 2019), at https://financialservices.house.gov/calendar/
eventsingle.aspx?EventID=404239. eventsingle.aspx?EventID=404239.
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Appendix summarizes the legislation Appendix summarizes the legislation on debt collection that passed the House or was marked up on debt collection that passed the House or was marked up
and ordered to be reported by the House Financial Services Committee during the 116th Congress. and ordered to be reported by the House Financial Services Committee during the 116th Congress.
Overview of Debt Collection Market
This section provides an overview of the debt collection market. This section provides an overview of the debt collection market. ~~First, it~~It describes the market describes the market
between creditors and debt collectorsbetween creditors and debt collectors, and discusses debt collector operations in detail. and discusses debt collector operations in detail. ~~Then, this~~
~~section~~It also addresses consumer experiences in the market, including the CFPB’s consumer addresses consumer experiences in the market, including the CFPB’s consumer
complaints about the industry. complaints about the industry.
The Market Between Creditors and Debt Collectors
Creditors Creditors ~~general y~~generally want to recoup their losses to the maximum extent possible after a consumer want to recoup their losses to the maximum extent possible after a consumer
defaults on a loan or debt. When creditors can effectively recoup their losses, they may be more defaults on a loan or debt. When creditors can effectively recoup their losses, they may be more
~~wil ing~~willing to lend to consumers at lower initial loan costs, leading to more access to credit for to lend to consumers at lower initial loan costs, leading to more access to credit for
consumers.6 Some creditors may choose to collect their debts themselves. However, some may consumers.6 Some creditors may choose to collect their debts themselves. However, some may
choose to contract with a debt collector because they do not want to be associated with aggressive choose to contract with a debt collector because they do not want to be associated with aggressive
collection practices,7 because debt collection practices,7 because debt ~~col ectors~~collectors might have a competitive advantage in collecting might have a competitive advantage in collecting
debt, or both.8 Although creditors have the right to use the court system to recoup their losses by debt, or both.8 Although creditors have the right to use the court system to recoup their losses by
obtaining judgments against defaulting consumers, such as wage garnishment, these legal options obtaining judgments against defaulting consumers, such as wage garnishment, these legal options
may be more costly to creditors than the debt collection process.may be more costly to creditors than the debt collection process.
Many types of industries use the debt collection market. In 2019, debt from unpaid loans or other Many types of industries use the debt collection market. In 2019, debt from unpaid loans or other
financial services accounted for close to 40% of debt collection revenue.9 The other 60% of debt financial services accounted for close to 40% of debt collection revenue.9 The other 60% of debt
collection revenue included nonfinancial services debt, such as telecommunications, utility, collection revenue included nonfinancial services debt, such as telecommunications, utility,
medical, retail, and government debts (semedical, retail, and government debts (see Figure 1)).10 ~~.10~~

6 Robert M. Hunt, 6 Robert M. Hunt, Collecting Consumer Debt in America, Federal Reserve Bank of Philadelphia, Business, Federal Reserve Bank of Philadelphia, Business Review, Review,
February 2007, at https://www.philadelphiafed.org/-/media/research-and-data/publications/business-review/2007/q2/February 2007, at https://www.philadelphiafed.org/-/media/research-and-data/publications/business-review/2007/q2/
hunt_collecting-consumer-debt.pdf (hereinafter Hunt, hunt_collecting-consumer-debt.pdf (hereinafter Hunt, Collecting ~~Consum er~~Consumer Debt in ~~Am erica~~America, Federal Reserve Bank of , Federal Reserve Bank of
Philadelphia, 2007). Philadelphia, 2007).
7 Viktar Fedaseyeu 7 Viktar Fedaseyeu and Robert M. Hunt, and Robert M. Hunt, The Economics of Debt Collection: Enforcement of Consumer Credit
Contracts, Federal, Federal Reserve Bank of Philadelphia, Working Reserve Bank of Philadelphia, Working ~~Pap er~~Paper no. 18-04, October 1, 2018, at no. 18-04, October 1, 2018, at
https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2018/wp18-04r.pdf. https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2018/wp18-04r.pdf.
8 For more information on why a creditor might use8 For more information on why a creditor might use a debt collector, see Conference of State Bank Supervisors, a debt collector, see Conference of State Bank Supervisors,
“Chapter Five: Overview of Debt Collection,” “Chapter Five: Overview of Debt Collection,” Reengineering NonBank Supervisors, January 2020, p. 5, at , January 2020, p. 5, at
https://www.csbs.org/system/files/2020-02/Chapter%20Five%20-https://www.csbs.org/system/files/2020-02/Chapter%20Five%20-
%20Overview%20of%20Debt%20Collection%20FINAL4.pdf%20Overview%20of%20Debt%20Collection%20FINAL4.pdf (hereinafter Conference of State Bank Supervisors, (hereinafter Conference of State Bank Supervisors,
“Chapter Five: Overview of Debt Collection,” 2020). “Chapter Five: Overview of Debt Collection,” 2020).
9 Jaura, 9 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 16. World, 2019, p. 16.
10 Jaura, 10 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 16. World, 2019, p. 16.
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Figure 1. Debt Collection Major Market Segmentation by 2019 Share of Revenue

Source: Rohan Jaura, Rohan Jaura, Debt ~~Col ection~~ Collection Agencies in the US, IBIS World,, IBIS World, Industry Report 56144, DecemberIndustry Report 56144, December 2019, p. 2019, p.
16. 16.
Debt collectors Debt collectors ~~typical y~~typically either contract with the original creditor to receive a share of any either contract with the original creditor to receive a share of any
amount collected on behalf of the originalamount collected on behalf of the original lender or buy the debt obligation in full.11 CFPB lender or buy the debt obligation in full.11 CFPB
research suggests that buying the debt obligation in full has declined in the past decade,12 and research suggests that buying the debt obligation in full has declined in the past decade,12 and
most debt collectors now operate by receiving a share of the amount collected on behalf of the most debt collectors now operate by receiving a share of the amount collected on behalf of the
originaloriginal lender.13 Creditors may choose among thousands of debt collector companies to contract lender.13 Creditors may choose among thousands of debt collector companies to contract
with to collect or with to collect or ~~sel~~ sell their consumer debts.14 The CFPB estimates that about 95% of companies their consumer debts.14 The CFPB estimates that about 95% of companies
operating in this market are operating in this market are ~~smal~~ small businesses.15 However, in the past few decades, the debt businesses.15 However, in the past few decades, the debt
collection market has experienced consolidation due to new technologies, such as automated collection market has experienced consolidation due to new technologies, such as automated ~~cal~~
call center systems, which have made this industry more efficient and led to greater economies of center systems, which have made this industry more efficient and led to greater economies of
scale.16 Larger debt collection companies may be better positioned to handle higher volumes from scale.16 Larger debt collection companies may be better positioned to handle higher volumes from
larger companies and increased regulatory compliance burdens.17 larger companies and increased regulatory compliance burdens.17
Debt collectors can Debt collectors can ~~cal~~ call, send letters, and use other methods to contact consumers to collect an , send letters, and use other methods to contact consumers to collect an
~~al eged~~alleged debt.18 In general, debt collectors expect to collect only a fraction of the face value of any debt.18 In general, debt collectors expect to collect only a fraction of the face value of any

11 CFPB, 11 CFPB, Fair Debt Collection Practices Act, March 2020, pp. 8-10, at https://www.consumerfinance.gov/data-, March 2020, pp. 8-10, at https://www.consumerfinance.gov/data-
research/research-reports/fair-debt-collection-practices-act-annual-report-2020/ (hereinafter CFPB, research/research-reports/fair-debt-collection-practices-act-annual-report-2020/ (hereinafter CFPB, Fair Debt
Collection Practices Act). Some). Some states have debt collection licensing requirements, although there is no licensing states have debt collection licensing requirements, although there is no licensing
requirement at the federal level. Seerequirement at the federal level. See Conference of State Bank Supervisors,Conference of State Bank Supervisors, “ “Chapter Five: Overview of Debt Chapter Five: Overview of Debt
Collection,” 2020, pp. 4-16, 18-19. Collection,” 2020, pp. 4-16, 18-19.
12 CFPB, 12 CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, July 2019, p. 10, at , July 2019, p. 10, at
https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf (hereinafter CFPB, https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf (hereinafter CFPB,
Market Snapshot: Third-Party Debt Collections Tradeline Reporting ). ).
13 CFPB, 13 CFPB, Fair Debt Collection Practices Act, pp. 8-10. , pp. 8-10.
14 Jaura, 14 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 4. World, 2019, p. 4.
15 CFPB, “Debt Collection Practices (Regulation F),” 8415 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23392-23393, May 21, 2019. 23392-23393, May 21, 2019.
16 Hunt, 16 Hunt, Collecting Consumer Debt in America, Federal Reserve Bank of Philadelphia, 2007. , Federal Reserve Bank of Philadelphia, 2007.
17 Jaura, 17 Jaura, Debt Collection Agencies in the US, IBIS, IBIS World, 2019, p. 11. World, 2019, p. 11.
18 CFPB, 18 CFPB, Fair Debt Collection Practices Act, p. 7. , p. 7.
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particular debt, knowing that some consumers particular debt, knowing that some consumers ~~wil~~ will never pay back their debts in full. Therefore, never pay back their debts in full. Therefore,
when a debt collector contacts a consumer, both parties can negotiate the amount and payment when a debt collector contacts a consumer, both parties can negotiate the amount and payment
schedule of the debt.19 schedule of the debt.19
If a consumer does not settle a debt, the debt owner often has several options, such as seizing the If a consumer does not settle a debt, the debt owner often has several options, such as seizing the
collateral for secured loans (e.g., car, home)20 or garnishing a consumer’s wages after obtaining a collateral for secured loans (e.g., car, home)20 or garnishing a consumer’s wages after obtaining a
court order. According to CFPB research, “the cost of filing a claim plays a large role in litigation court order. According to CFPB research, “the cost of filing a claim plays a large role in litigation
decisions and varies significantly across jurisdictions based on differences in factors such as decisions and varies significantly across jurisdictions based on differences in factors such as
filing fees and what types of collections claims can be brought in filing fees and what types of collections claims can be brought in ~~smal~~ small claims court.”21 More claims court.”21 More
than half of filed suits lead to default judgments in favor of the debt owner, often because than half of filed suits lead to default judgments in favor of the debt owner, often because
consumers fail to appear in court.22 According to a CFPB consumer survey, about 15% of those consumers fail to appear in court.22 According to a CFPB consumer survey, about 15% of those
contacted about a debt were sued in the past year.23 Of those sued, a fraction—about a quarter—contacted about a debt were sued in the past year.23 Of those sued, a fraction—about a quarter—
of consumers reported attending the court hearing.24 of consumers reported attending the court hearing.24

~~19 CFPB, “~~ 19 CFPB, “What is the Best Way to Negotiate a Settlement With a Debt Collector?” March 29, 2019, at What is the Best Way to Negotiate a Settlement With a Debt Collector?” March 29, 2019, at
https://www.consumerfinance.gov/ask-cfpb/whathttps://www.consumerfinance.gov/ask-cfpb/what -is-the-best-way-to-negotiate-a-settlement-with-a-debt-collector-en--is-the-best-way-to-negotiate-a-settlement-with-a-debt-collector-en-
1447/. 1447/.
20 Legal processes are in place 20 Legal processes are in place ~~t o~~to seize collateral for secured loans, such as foreclosure or car repossession. seize collateral for secured loans, such as foreclosure or car repossession.
21 CFPB, 21 CFPB, Study of Third-Party Debt Collection Operations, July 2016, p. 18, at https://files.consumerfinance.gov/f/, July 2016, p. 18, at https://files.consumerfinance.gov/f/
documents/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf (hereinafter CFPB, documents/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf (hereinafter CFPB, Study of Third-
Party Debt Collection Operations). ).
22 CFPB, 22 CFPB, Study of Third-Party Debt Collection Operations, p. 18. , p. 18.
23 CFPB, 23 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
24 CFPB, 24 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
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Debt Collection and Credit Reporting
Many financial institutions furnish information about their customers’ Many financial institutions furnish information about their customers’ payment historiespayment histories to credit bureaus.25 Credit to credit bureaus.25 Credit
bureaus (or credit reporting agencies) col ect and subsequently provide consumer information to firms,bureaus (or credit reporting agencies) col ect and subsequently provide consumer information to firms, which use which use
this informationthis information to screen for consumerto screen for consumer risks.risks. For example,For example, lenders relylenders rely on credit reports and scoreson credit reports and scores to to
determinedetermine the likelihoodthe likelihood that prospectivethat prospective ~~borrowers wil~~ borrowers wil repay their loans before entering into a financial repay their loans before entering into a financial
relationship with those consumers. relationship with those consumers.
Debt col ectorsDebt col ectors are not required (but they may choose) to furnish information about debts to credit bureaus. For are not required (but they may choose) to furnish information about debts to credit bureaus. For
financial servicesfinancial services debts, lenders may have already reporteddebts, lenders may have already reported to the credit bureaus that a consumerto the credit bureaus that a consumer defaulted on the defaulted on the
debt before debt col ectiondebt before debt col ection begins. For nonfinancial debts, creditorsbegins. For nonfinancial debts, creditors are often lessare often less ~~likely~~ likely to report this information. to report this information.
According to the Consumer Financial Protection Bureau (CFPB), debt col ectorsAccording to the Consumer Financial Protection Bureau (CFPB), debt col ectors frequently choose not to furnish frequently choose not to furnish
information to credit bureaus due to costs and potential legal liability,information to credit bureaus due to costs and potential legal liability, but most debt col ectorsbut most debt col ectors furnish information furnish information
~~occasional y.26 General y,~~ occasionally.26 Generally, debt buyers who buy debt obligations in ful are more likelydebt buyers who buy debt obligations in ful are more likely to report debts to credit to report debts to credit
bureaus.27 Debts can bureaus.27 Debts can ~~general y~~generally be reported in a be reported in a ~~consumers’~~ consumer’s credit recordcredit record for seven years.for seven years. A debt is considered A debt is considered
obsolete when it can no longer be included in a consumer’s when it can no longer be included in a consumer’s credit report. credit report.
Over one-fourth of consumers have a debt col ection on their credit report.28 Past-due medical bil s,Over one-fourth of consumers have a debt col ection on their credit report.28 Past-due medical bil s, credit cards, credit cards,
and student loans wereand student loans were the mostthe most common types of debts on credit records.29common types of debts on credit records.29 According to the CFPB, those According to the CFPB, those
contacted about credit card and student loan debts differed morecontacted about credit card and student loan debts differed more across demographic characteristics and credit across demographic characteristics and credit
scoresscores than those contacted about medicalthan those contacted about medical debt.30 Somedebt.30 Some debt col ectorsdebt col ectors engage in engage in passive ~~col ections~~collections—reporting—reporting a a
debt to a credit reporting agency and waiting for the consumer to discoverdebt to a credit reporting agency and waiting for the consumer to discover and pay back the debtand pay back the debt —rather than —rather than
spending resourcesspending resources actively col ecting the debt fromactively col ecting the debt from consumers.consumers. The practice of passive col ectionsThe practice of passive col ections is is
controversial,controversial, and the CFPB suggests that it may not affect many consumers.31 and the CFPB suggests that it may not affect many consumers.31
Debt col ectionsDebt col ections are disputed with credit bureaus at a greater rate than other types of credit report information.32 are disputed with credit bureaus at a greater rate than other types of credit report information.32
This could be for many reasons.This could be for many reasons. For example,For example, debt col ectiondebt col ection information is moreinformation is more ~~likely~~ likely to negatively affect a to negatively affect a
consumer’sconsumer’s credit record.credit record. In addition, this information may tend to be less accurate than other credit report In addition, this information may tend to be less accurate than other credit report
information.information. According to a CFPB survey, moreAccording to a CFPB survey, more than half of consumersthan half of consumers who had been contacted about a debt in who had been contacted about a debt in
col ectioncol ection reported an errorreported an error relating to at least one such debt,33 and about a quarter disputed the debt with the relating to at least one such debt,33 and about a quarter disputed the debt with the
debt col ector.34debt col ector.34 Although consumers’Although consumers’ demographics were not correlateddemographics were not correlated with citing an issue with an with citing an issue with an ~~al eged~~alleged debt, debt,
older,older, wealthier,wealthier, and higher credit quality consumersand higher credit quality consumers were morewere more ~~likely~~ likely to report disputing the debt.35 to report disputing the debt.35
Consumer Experiences
Many consumers in the United States experience the debt collection process.36 According to a Many consumers in the United States experience the debt collection process.36 According to a
2014-2015 CFPB survey, about one-third of consumers with a credit bureau file reported being 2014-2015 CFPB survey, about one-third of consumers with a credit bureau file reported being
contacted in the last year by at least one creditor or collector trying to collect on one or more contacted in the last year by at least one creditor or collector trying to collect on one or more

25 For more information on the credit reporting system, see CRS25 For more information on the credit reporting system, see CRS Report R44125, Report R44125, Consumer Credit Reporting, Credit
Bureaus, Credit Scoring, and Related Policy Issues, by Cheryl R. Cooper and Darryl E. Getter. , by Cheryl R. Cooper and Darryl E. Getter.
26 CFPB, 26 CFPB, Study of Third-Party Debt Collection Operations, p. 19. , p. 19.
27 CFPB, 27 CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, p. 5. , p. 5.
28 CFPB, 28 CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, pp. 5-7. For more information about the , pp. 5-7. For more information about the
geography of consumers with delinquentgeography of consumers with delinquent debt across the United States, seedebt across the United States, see Urban Institute, “Urban Institute, “ Debt in America: An Debt in America: An
Interactive Map,” last updated December 17, 2019, at https://apps.urban.org/features/debt-interactive-map/?type=Interactive Map,” last updated December 17, 2019, at https://apps.urban.org/features/debt-interactive-map/?type=
overall&variable=pct_debt_collections. overall&variable=pct_debt_collections.
29 CFPB, 29 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
30 CFPB, 30 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
31 CFPB, 31 CFPB, Consumer Experiences with Debt Collection, pp. 14-15. , pp. 14-15.
32 CFPB, 32 CFPB, Market Snapshot: Third-Party Debt Collections Tradeline Reporting, p. 14. , p. 14.
33 CFPB, 33 CFPB, Consumer Experiences with Debt Collection,, p. 24. p. 24.
34 CFPB, 34 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
35 CFPB, 35 CFPB, Consumer Experiences with Debt Collection, p. 25. , p. 25.
36 For resources36 For resources for consumers having trouble paying their debts, see CFPB, “for consumers having trouble paying their debts, see CFPB, “ Debt Collection: Consumer Debt Collection: Consumer ~~T ools~~Tools,” at ,” at
https://www.consumerfinance.gov/consumer-tools/debt-collection/. https://www.consumerfinance.gov/consumer-tools/debt-collection/.
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debts.37 Consumers with lower incomes and nonprime credit scores were more likely to report debts.37 Consumers with lower incomes and nonprime credit scores were more likely to report
experiences with debt collection than consumers with higher incomes and prime credit scores.38 experiences with debt collection than consumers with higher incomes and prime credit scores.38
In addition, over 40% of consumers reported In addition, over 40% of consumers reported ~~tel ing~~telling a collector to stop contacting them, and of a collector to stop contacting them, and of
those consumers, about a quarter reported that the contact stopped after their request.39 those consumers, about a quarter reported that the contact stopped after their request.39
According to the CFPB, consumer complaints about debt collection accounted for 21% of the According to the CFPB, consumer complaints about debt collection accounted for 21% of the
total complaints it received in 2019.40 The most common such complaints asserted that a debt total complaints it received in 2019.40 The most common such complaints asserted that a debt
collector attempted to collect a debt the consumer did not believe was owed (45%), or a consumer collector attempted to collect a debt the consumer did not believe was owed (45%), or a consumer
received insufficient written notification about a debt (18%) (sreceived insufficient written notification about a debt (18%) (see Table 1).41.41
Table 1. Types of Debt Collection Complaints Reported by Consumers in 2019
Types of Complaints
% of Debt Collection Complaints
Attempts to col ect debt not owed Attempts to col ect debt not owed
45% 45%
Complaints about written notification about the debt Complaints about written notification about the debt
18% 18%
Negative or legal actions or threats to take such actions Negative or legal actions or threats to take such actions
12% 12%
Complaints about communication tactics Complaints about communication tactics
12% 12%
False statements or representations False statements or representations
11% 11%
Threats to contact someone Threats to contact someone or share information improperly or share information improperly
3% 3%
Source: Consumer Financial Protection Bureau, Consumer Financial Protection Bureau, Fair Debt ~~Col ection~~ Collection Practices Act, March 2020, p. 14, at , March 2020, p. 14, at
https://www.consumerfinance.gov/data-research/research-reports/fair-debt-col https://www.consumerfinance.gov/data-research/research-reports/fair-debt-col ~~ect ion~~ection-practices-act-annual--practices-act-annual-
report-2020. report-2020.
Consumers who cannot pay their debts may turn to the federal bankruptcy process, which is Consumers who cannot pay their debts may turn to the federal bankruptcy process, which is
~~general y~~generally governed by the Bankruptcy Code.42 In general, the bankruptcy process governed by the Bankruptcy Code.42 In general, the bankruptcy process ~~al ows~~allows a a
consumer to enter a court-administered proceeding to discharge certain debts and obtain a fresh consumer to enter a court-administered proceeding to discharge certain debts and obtain a fresh
start. However, consumers may face negative repercussions by choosing bankruptcy (e.g., a lower start. However, consumers may face negative repercussions by choosing bankruptcy (e.g., a lower
credit score and reduced access to credit for several years afterward). In 2005, Congress passed credit score and reduced access to credit for several years afterward). In 2005, Congress passed
the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA; P.L. 109-8) in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA; P.L. 109-8) in
response to what some perceived as a high number of consumer bankruptcy filings and concerns response to what some perceived as a high number of consumer bankruptcy filings and concerns
about some consumers abusing the system. BAPCPA made numerous amendments to the about some consumers abusing the system. BAPCPA made numerous amendments to the
Bankruptcy Code. One change was to impose a “means test” to determine when consumers have Bankruptcy Code. One change was to impose a “means test” to determine when consumers have
the financial ability to pay their debts in the financial ability to pay their debts in ~~instal ments~~installments over several years, rather than receiving over several years, rather than receiving
more immediate relief from their debts.43more immediate relief from their debts.43

37 CFPB, 37 CFPB, Consumer Experiences with Debt Collection, p. 5. , p. 5.
38 CFPB, 38 CFPB, Consumer Experiences with Debt Collection, pp. 15-16. , pp. 15-16.
39 CFPB, 39 CFPB, Consumer Experiences with Debt Collection,, p. 5. p. 5.
40 CFPB, 40 CFPB, Consumer Response Annual Report, p. 9. Debt collection was, p. 9. Debt collection was the seventh most complained about industry to the seventh most complained about industry to
the Federal the Federal ~~T rade~~Trade Commission ( Commission (~~FT C~~FTC), accounting for 4.22% of all complaints in 2019. See ), accounting for 4.22% of all complaints in 2019. See ~~FT C,~~ ~~Consum er~~FTC, Consumer Sentinel
Network: Data Book 2019, January 2020, p. 7, at https://www.ftc.gov/system/files/documents/reports/consumer-, January 2020, p. 7, at https://www.ftc.gov/system/files/documents/reports/consumer-
sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf. sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf.
41 CFPB,41 CFPB, Fair Debt Collection Practices Act, pp. 14-15. , pp. 14-15. ~~T he~~ “ The “The Fair Debt Collection Practices Act ”” section of this section of this
report discussesreport discusses written notification requirements in detail. written notification requirements in detail.
42 11 U.S.C. 42 11 U.S.C. §§101-1532. For more information on the bankruptcy process, see CRS§§101-1532. For more information on the bankruptcy process, see CRS Report R45137, Report R45137, Bankruptcy
Basics: A ~~Prim er~~Primer, by Kevin M. Lewis., by Kevin M. Lewis.
43 11 U.S.C. 43 11 U.S.C. §707(b) provides the following: §707(b) provides the following:
After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, After notice and a hearing, the court, on its own motion or on a motion by the United States trustee,
trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filedtrustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an by an
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In addition to the federal bankruptcy process, many states limit the length of time consumers can In addition to the federal bankruptcy process, many states limit the length of time consumers can
be sued on a debt, be sued on a debt, ~~cal ed~~called time-barred debt.44 Different states have different time-barred debt rules, .44 Different states have different time-barred debt rules,
but but ~~general y~~generally, most , most ~~fal~~ fall between three and six years.45 Therefore, some consumers may have their between three and six years.45 Therefore, some consumers may have their
debts age past the statute of limitations, even if they do not go through the bankruptcy process.46 debts age past the statute of limitations, even if they do not go through the bankruptcy process.46
This result is sometimes referred to as This result is sometimes referred to as informal bankruptcy. Even though consumers are no . Even though consumers are no
longer able to be sued on time-barred debts, debt collectors in most states can continue to collect longer able to be sued on time-barred debts, debt collectors in most states can continue to collect
on these debts. In addition, in many states, debts can be revived if certain conditions are met. For on these debts. In addition, in many states, debts can be revived if certain conditions are met. For
example, in some states, if a consumer makes a partial payment on a debt or acknowledges it in example, in some states, if a consumer makes a partial payment on a debt or acknowledges it in
writing, a debt collector can sue on the debt after the statute of limitations has expired. writing, a debt collector can sue on the debt after the statute of limitations has expired.
Debt Relief Companies and Credit Counseling Agencies
Debt relief Debt relief ~~companies~~ companies and credit counseling agencies provide servicesand credit counseling agencies provide services to help consumers manage unsecured to help consumers manage unsecured
debt.47 These organizations can be nonprofit or for-profit companies.debt.47 These organizations can be nonprofit or for-profit companies. Two common types of debt reliefTwo common types of debt relief services services
are are debt consolidation (consolidating debts into one larger(consolidating debts into one larger consumer loan) and consumer loan) and debt management plans (working (working
with creditorswith creditors to gain concessions,to gain concessions, such as waiving fees and loweringsuch as waiving fees and lowering interest rates, to make it easierinterest rates, to make it easier for for
consumersconsumers to pay back creditors).to pay back creditors). Related services,Related services, such as financial education, are often offered by these types of such as financial education, are often offered by these types of
organizations. organizations.
Debt settlements are agreements between the creditor and consumer are agreements between the creditor and consumer to resolveto resolve the debt for lessthe debt for less than the ful than the ful
balance owed. These settlementsbalance owed. These settlements are sometimesare sometimes arranged directly between creditorsarranged directly between creditors and consumersand consumers ~~and~~ and are are
sometimessometimes managed by debt reliefmanaged by debt relief companies. Consumercompanies. Consumer Financial Protection Bureau data suggest a growth in Financial Protection Bureau data suggest a growth in
debt settlementsdebt settlements in recent years.48 in recent years.48
A consumer protection concern in this marketA consumer protection concern in this market is whether consumersis whether consumers understand their options and the services understand their options and the services
they are paying for. In recent years,they are paying for. In recent years, the federal government has implementedthe federal government has implemented new regulations on these new regulations on these
organizations. In 2006, Congressorganizations. In 2006, Congress created standards for nonprofit credit counseling agencies, such as reasonable created standards for nonprofit credit counseling agencies, such as reasonable
fees,fees, bans on the provision of loans, and limitsbans on the provision of loans, and limits on the ability to on the ability to ~~financial y~~financially gain from services gain from services provided to provided to
consumers.49consumers.49 In 2010, the Federal Trade CommissionIn 2010, the Federal Trade Commission issued a final rule that bans for-profit debt reliefissued a final rule that bans for-profit debt relief companies companies
from charging a fee before providing their servicesfrom charging a fee before providing their services to consumers.50to consumers.50 It also requiresIt also requires ~~disclosures~~ disclosures and prohibits and prohibits
misrepresentationsmisrepresentations when telemarketingwhen telemarketing debt reliefdebt relief ~~services~~ services to consumers.to consumers. Given the industry’s growth in recent Given the industry’s growth in recent
years, debate continues around its appropriate regulation.51 years, debate continues around its appropriate regulation.51

~~individual~~ individual debtor under this chapter whose debtsdebtor under this chapter whose debts are primarily consumer debts,are primarily consumer debts, or, with the debtor’s or, with the debtor’s
consent, convert such a case to a case underconsent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting chapter 11 or 13 of this title, if it finds that the granting
of relief wouldof relief would be an abusebe an abuse of the provisions of this chapter. of the provisions of this chapter.
44 44 ~~FT C, “T ime~~FTC, “Time-Barred Debts,” July 2013, at https://www.consumer.ftc.gov/articles/0117-time-barred-debts. -Barred Debts,” July 2013, at https://www.consumer.ftc.gov/articles/0117-time-barred-debts.
45 45 ~~FT C~~FTC, , The Structure and Practices of the Debt Buying Industry, January 2013, p. 42, at https://www.ftc.gov/sites/, January 2013, p. 42, at https://www.ftc.gov/sites/
default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf. default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf.
46 The~~46 T he~~ debtor remains legally debtor remains legally obligated to pay the debt, however, the debt collector can no longer resort to legally obligated to pay the debt, however, the debt collector can no longer resort to legally
enforceable actions. Seeenforceable actions. See MidlandMidland Funding,Funding, LLC v. Johnson, 137 1407 1411-1420 (S.Ct. 2017). LLC v. Johnson, 137 1407 1411-1420 (S.Ct. 2017).
47 Conference of State Bank Supervisors, “ 47 Conference of State Bank Supervisors, “ Chapter Five: Overview of Debt Collection,” 2020, pp. 3, 6. Chapter Five: Overview of Debt Collection,” 2020, pp. 3, 6.
48 Christa Gibbs48 Christa Gibbs et al., et al., Recent Trends in Debt Settlement and Credit Counseling, CFPB, Quarterly Consumer Credit , CFPB, Quarterly Consumer Credit
~~T rends~~Trends, July 2020, at https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_debt, July 2020, at https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_debt --
settlementsettlement -credit-credit -counseling_2020-07.pdf. -counseling_2020-07.pdf.
49 P.L. 109-280, §1220. 49 P.L. 109-280, §1220.
50 50 ~~FT C, “T elemarketing~~FTC, “Telemarketing Sales Rule,” Sales Rule,” 7575 Federal Register 48458-48523, August 10, 2010. 48458-48523, August 10, 2010.
51 CFPB, “51 CFPB, “ Evolutions in Consumer Debt Relief,” March 10, 2020, at https://www.consumerfinance.gov/about-us/Evolutions in Consumer Debt Relief,” March 10, 2020, at https://www.consumerfinance.gov/about-us/
events/archive-past-events/evolutions-in-consumer-debt-relief-event/. events/archive-past-events/evolutions-in-consumer-debt-relief-event/.
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The Fair Debt Collection Practices Act52
Robust debt collection markets may benefit consumers by expanding access to credit, but they Robust debt collection markets may benefit consumers by expanding access to credit, but they
could also harm consumers. Creditors who rely on relationships with consumers for future could also harm consumers. Creditors who rely on relationships with consumers for future
business may care more about maintaining their reputations when collecting on a debt than debt business may care more about maintaining their reputations when collecting on a debt than debt
collectors who contract with creditors rather than consumers. Consumers do not have the ability collectors who contract with creditors rather than consumers. Consumers do not have the ability
to choose the debt collector with whom they engage and are unable to take their business to choose the debt collector with whom they engage and are unable to take their business
elsewhere if abuses occur. In this way, the debt elsewhere if abuses occur. In this way, the debt ~~col ection~~collection market does not provide an economic market does not provide an economic
incentive to provide good service to consumers, as in other consumer markets. For this reason, incentive to provide good service to consumers, as in other consumer markets. For this reason,
consumer protection laws and regulations may be particularly consequential. consumer protection laws and regulations may be particularly consequential.
The FDCPA is the primary federal statute regulating the consumer debt collection market.53 The FDCPA is the primary federal statute regulating the consumer debt collection market.53
Congress passed the FDCPA in 1977 to “eliminateCongress passed the FDCPA in 1977 to “eliminate abusive debt collection practices by debt abusive debt collection practices by debt
collectors.”54 The law collectors.”54 The law ~~general y~~generally applies only to debt collectors, not the original creditors.55 It applies only to debt collectors, not the original creditors.55 It
prohibits debt collectors from engaging in certain types of conduct when seeking to collect certain prohibits debt collectors from engaging in certain types of conduct when seeking to collect certain
debts from consumers, such as engaging in harassment or abuse56 or making false or misleading debts from consumers, such as engaging in harassment or abuse56 or making false or misleading
representations.57 The FDCPA limits when and how a debt collector communicates with a representations.57 The FDCPA limits when and how a debt collector communicates with a
consumer, such as limits on communications at “unusual time[s] or place[s],”58 and grants consumer, such as limits on communications at “unusual time[s] or place[s],”58 and grants
consumers the right to dispute59 or stop certain communications about an consumers the right to dispute59 or stop certain communications about an ~~al eged~~alleged debt.60 debt.60
Moreover, the FDCPA requires that a debt collector must send a consumer a validation notice, Moreover, the FDCPA requires that a debt collector must send a consumer a validation notice,
which is to disclose certain information about the debt to the consumer, within five days of the which is to disclose certain information about the debt to the consumer, within five days of the
~~initial~~ initial communication.61 communication.61
In 2010, the Dodd-Frank In 2010, the Dodd-Frank ~~Wal~~ Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L.
111-203) granted the CFPB authority over the FDCPA and became the first federal agency to be 111-203) granted the CFPB authority over the FDCPA and became the first federal agency to be
able to write regulations to implement the FDCPA.62 It also grants the CFPB authority over those able to write regulations to implement the FDCPA.62 It also grants the CFPB authority over those
who collect debt related to a consumer financial product service, as defined in the Dodd-Frank who collect debt related to a consumer financial product service, as defined in the Dodd-Frank
Act. The rest of this section discusses the CFPB’s supervision and enforcement of the FDCPA. Act. The rest of this section discusses the CFPB’s supervision and enforcement of the FDCPA.
This section also discusses the CFPB’s active proposed rulemaking related to the debt collection This section also discusses the CFPB’s active proposed rulemaking related to the debt collection
market, including its intention to clarify and update provisions in the FDCPA. market, including its intention to clarify and update provisions in the FDCPA.

52 For more information about the Fair Debt Collection Practices Act (FDCPA), see CRS52 For more information about the Fair Debt Collection Practices Act (FDCPA), see CRS In FocusIn Focus IF11247, IF11247, The Fair
Debt Collection Practices Act: Legal ~~Fram ework~~Framework, by Kevin M. Lewis. , by Kevin M. Lewis.
53 15 U.S.C. 53 15 U.S.C. §1692a. §1692a. ~~T he~~The law only includes law only includes consumer debts “primarily for personal, family, or household purposes.” consumer debts “primarily for personal, family, or household purposes.”
54 15 U.S.C.54 15 U.S.C. §1692. §1692.
55 15 U.S.C.55 15 U.S.C. §1692a. §1692a. ~~T he~~The FDCPA can apply to a creditor collecting its own debts FDCPA can apply to a creditor collecting its own debts ~~using~~ using a different name. Some a different name. Some
creditors audit creditors audit ~~t heir~~their debt collectors in terms of compliance with federal and state law. For more information on auditing debt collectors in terms of compliance with federal and state law. For more information on auditing
practices of debt collectors, see CFPB, practices of debt collectors, see CFPB, Study of Third-Party Debt Collection Operations, pp. 20-21. , pp. 20-21.
56 15 U.S.C. 56 15 U.S.C. §1692d. §1692d.
57 15 U.S.C.57 15 U.S.C. §1692e. §1692e.
58 15 U.S.C.58 15 U.S.C. §1692c(a)(1). §1692c(a)(1).
59 15 U.S.C.59 15 U.S.C. §1692g(b). §1692g(b).
60 15 U.S.C.60 15 U.S.C. §1692c(c). For exceptions to this rule, see 15 U.S.C.§1692c(c). For exceptions to this rule, see 15 U.S.C. §1692c(c)(1)-(3). §1692c(c)(1)-(3).
61 15 U.S.C.61 15 U.S.C. §1692g(a). §1692g(a).
62 See62 See P.L. 111-203, §1002 and §1011. For more information on the CFPB’s authorities, see CRSP.L. 111-203, §1002 and §1011. For more information on the CFPB’s authorities, see CRS In FocusIn Focus IF10031, IF10031,
Introduction to Financial Services: The Bureau of ~~Consum er~~Consumer Financial Protection (CFPB) , by Cheryl R. Cooper and , by Cheryl R. Cooper and
David H. Carpenter. David H. Carpenter.
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Supervision and Enforcement
The federal government supervises and enforces the debt collection market for compliance with The federal government supervises and enforces the debt collection market for compliance with
relevant laws, such as the FDCPA. The CFPB has supervisory authority, or the authority to relevant laws, such as the FDCPA. The CFPB has supervisory authority, or the authority to
conduct examinations, over nonbank firms with more than $10 conduct examinations, over nonbank firms with more than $10 ~~mil ion~~million in annual receipts from in annual receipts from
consumer debt collection activities. Both the Federal Trade Commission (FTC) and the CFPB can consumer debt collection activities. Both the Federal Trade Commission (FTC) and the CFPB can
enforce FDCPA provisions.63 The FDCPA also establishes a private right of action for consumers enforce FDCPA provisions.63 The FDCPA also establishes a private right of action for consumers
to sue on their own behalf.64 to sue on their own behalf.64
Recently, the debt collection market has been an active area for the CFPB and the FTC. The Recently, the debt collection market has been an active area for the CFPB and the FTC. The
CFPB is required to report CFPB is required to report ~~annual y~~annually on the “administration of its functions” relating to the on the “administration of its functions” relating to the
FDCPA. In FY2019, the CFPB found three patterns in its supervisory activities: (1) the false FDCPA. In FY2019, the CFPB found three patterns in its supervisory activities: (1) the false
representation of the amount and legal status of debts; (2) a failure to disclose what representation of the amount and legal status of debts; (2) a failure to disclose what
communications are coming from a debt collector; and (3) a failure to send mandatory debt communications are coming from a debt collector; and (3) a failure to send mandatory debt
validationvalidation notices to consumers before collecting on a debt.65 In FY2019, the CFPB and the FTC notices to consumers before collecting on a debt.65 In FY2019, the CFPB and the FTC
also announced, filed, or resolved more than 30 debt collection enforcement actions.66 In addition, also announced, filed, or resolved more than 30 debt collection enforcement actions.66 In addition,
the CFPB and the FTC conducted education and outreach to the public about consumer rights and the CFPB and the FTC conducted education and outreach to the public about consumer rights and
~~responsibilities~~ responsibilities in the debt collection market under relevant laws.67 in the debt collection market under relevant laws.67
Consumer Financial Protection Bureau Rulemaking
On May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking intended to regulate the On May 21, 2019, the CFPB issued a Notice of Proposed Rulemaking intended to regulate the
debt collection market.68 The CFPB’s proposed regulation, among other things, seeks to clarify debt collection market.68 The CFPB’s proposed regulation, among other things, seeks to clarify
what information debt collectors should be required to disclose to consumers and how they what information debt collectors should be required to disclose to consumers and how they
should be required to communicate with consumers. The following sections describe selected should be required to communicate with consumers. The following sections describe selected
provisions of the CFPB’s proposal. provisions of the CFPB’s proposal.
Debt Disclosure
The CFPB’s proposed regulation would specify information a debt collector must include in the The CFPB’s proposed regulation would specify information a debt collector must include in the
validation notice it sends to a consumer, including certain information about the debt that may validation notice it sends to a consumer, including certain information about the debt that may
help the consumer identify the debt. It also would require disclosure about a consumer’s rights in help the consumer identify the debt. It also would require disclosure about a consumer’s rights in
the debt collection process, such as how to dispute a debt. The proposed regulation also would the debt collection process, such as how to dispute a debt. The proposed regulation also would
establish certain procedures by which a debt collector may obtain a “safe harbor” from liability. establish certain procedures by which a debt collector may obtain a “safe harbor” from liability.
For example, the CFPB, through consumer testing, has developed a model validation notice form, For example, the CFPB, through consumer testing, has developed a model validation notice form,
which debt which debt ~~col ectors~~collectors may use to ensure they are complying with the law.69 In addition, the may use to ensure they are complying with the law.69 In addition, the

~~63 15 U.S.C.~~ 63 15 U.S.C. §1692l(a)-(b). §1692l(a)-(b).
64 15 U.S.C.64 15 U.S.C. §1692k. §1692k.
65 CFPB, 65 CFPB, Fair Debt Collection Practices Act, pp. 18-19. , pp. 18-19.
66 CFPB, 66 CFPB, Fair Debt Collection Practices Act, pp. 24-31. , pp. 24-31.
67 CFPB, 67 CFPB, Fair Debt Collection Practices Act, pp. 32-37. , pp. 32-37.
68 CFPB, “Debt Collection Practices (Regulation F),” 8468 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23274, May 21, 2019. For an overview of 23274, May 21, 2019. For an overview of
the CFPB’s proposed debt collection regulation, see CRSthe CFPB’s proposed debt collection regulation, see CRS Insight IN11140, Insight IN11140, CFPB Proposes New Debt Collection
Regulation, by Cheryl R., by Cheryl R. Cooper. Cooper.
69 69 ~~T he~~The proposed model disclosure proposed model disclosure form can be found at https://files.consumerfinance.gov/f/documents/cfpb_debt-form can be found at https://files.consumerfinance.gov/f/documents/cfpb_debt-
collection-validation-notice.pdf. collection-validation-notice.pdf. ~~T o~~To learn more about the CFPB’s disclosure learn more about the CFPB’s disclosure testing, see Fors Marsh Group,testing, see Fors Marsh Group, Debt
Collection Validation Notice Research: ~~Sum m ary~~Summary of Focus Groups, Cognitive Interviews, and User Experience Testing, ,
February 2016, at https://files.consumerfinance.gov/f/documents/cfpb_debtFebruary 2016, at https://files.consumerfinance.gov/f/documents/cfpb_debt -collection_fmg-summary-report.pdf -collection_fmg-summary-report.pdf
(hereinafter Fors Marsh Group, (hereinafter Fors Marsh Group, Debt Collection Validation Notice Research: ~~Sum m ary~~Summary, 2016); and ICF, , 2016); and ICF, Quantitative
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proposal would bar debt collectors from furnishing information about a debt to a credit bureau proposal would bar debt collectors from furnishing information about a debt to a credit bureau
before sending the consumer a validation notice about the debt.70before sending the consumer a validation notice about the debt.70
On March 3, 2020, the CFPB issued a supplemental proposal,71 which would require a debt On March 3, 2020, the CFPB issued a supplemental proposal,71 which would require a debt
collector to disclose to a consumer whether a debt is time-barred. The supplemental proposal also collector to disclose to a consumer whether a debt is time-barred. The supplemental proposal also
would require the debt collector to disclose whether the debt could be revived by the consumer would require the debt collector to disclose whether the debt could be revived by the consumer
and how revival could occur. Like the model validationand how revival could occur. Like the model validation notice, the CFPB developed time-barred notice, the CFPB developed time-barred
debt and revivaldebt and revival disclosures using quantitative and qualitativedisclosures using quantitative and qualitative disclosure testing, which debt disclosure testing, which debt
collectors can use to ensure they are complying with the law.72 collectors can use to ensure they are complying with the law.72
Communication
The proposal would specify appropriate communication tactics for debt collectors. It would set The proposal would specify appropriate communication tactics for debt collectors. It would set
standards on contact frequency, limiting debt collector phone standards on contact frequency, limiting debt collector phone ~~cal s~~calls to seven times in a seven-day to seven times in a seven-day
period. It would also prohibit debt collectors from making period. It would also prohibit debt collectors from making ~~cal s~~calls within a week after speaking by within a week after speaking by
phone to a consumer. The proposed regulation would clarify that debt collectors can use newer phone to a consumer. The proposed regulation would clarify that debt collectors can use newer
technologies, such as email, voicemail, and text messages, to provide limited content messages to technologies, such as email, voicemail, and text messages, to provide limited content messages to
consumers. Debt collectors would be able to use these communication tools without limit, but consumers. Debt collectors would be able to use these communication tools without limit, but
consumers would have the right to request convenient times or places or restrict the consumers would have the right to request convenient times or places or restrict the
communication medium (e.g., opt out of text messages). communication medium (e.g., opt out of text messages).
Policy Issues
Appropriate regulation of the debt collection market has been a focus of congressional attention Appropriate regulation of the debt collection market has been a focus of congressional attention
in the 116th Congress. Research suggests that policymakers face a trade-off in the debt collection in the 116th Congress. Research suggests that policymakers face a trade-off in the debt collection
market between consumer protection benefits and the cost of reduced credit availability for market between consumer protection benefits and the cost of reduced credit availability for
consumers. Some economic research suggests that stricter debt collection regulations may lead to consumers. Some economic research suggests that stricter debt collection regulations may lead to
lower recovery rates on past debts, causing a reduction in credit (or higher cost of credit) for some lower recovery rates on past debts, causing a reduction in credit (or higher cost of credit) for some
consumers—however, the magnitude of this effect is debated.73consumers—however, the magnitude of this effect is debated.73
This section highlights five significant policy issues in the debt collection market: (1) This section highlights five significant policy issues in the debt collection market: (1)
communication frequency; (2) time-barred and obsolete debt; (3) validation issues; (4) medical communication frequency; (2) time-barred and obsolete debt; (3) validation issues; (4) medical
debt and credit reporting; and (5) federal, state, and local government debtdebt and credit reporting; and (5) federal, state, and local government debt. Table A-1 in the in the

Survey Testing of Model Disclosure Clauses and ~~Form s~~Forms for Debt Collection: Methodology Report , January 21, 2020, at , January 21, 2020, at
https://files.consumerfinance.gov/f/documents/cfpb_icf_debthttps://files.consumerfinance.gov/f/documents/cfpb_icf_debt -survey_methodology-report.pdf (hereinafter ICF, -survey_methodology-report.pdf (hereinafter ICF,
Methodology Report, 2020). , 2020).
70 For more information on debt collection and credit reporting, see the “Debt Collection and Credit Reporting” text 70 For more information on debt collection and credit reporting, see the “Debt Collection and Credit Reporting” text
box in box in “~~T he~~The Market Between Creditors and Debt Collectors.”
71 CFPB, “Debt Collection Practices (Regulation F),” 8571 CFPB, “Debt Collection Practices (Regulation F),” 85 Federal Register 12672-12702, March 3, 2020. 12672-12702, March 3, 2020.
72 72 ~~T o~~To learn more about the CFPB’s disclosure learn more about the CFPB’s disclosure testing relating to time-barred debt and revival, see CFPB, testing relating to time-barred debt and revival, see CFPB, Disclosure of
~~Tim e~~Time-Barred Debt and Revival: Findings from the CFPB’s Quantitative Disclosure Testing, February, February 2020, at 2020, at
https://files.consumerfinance.gov/f/documents/cfpb_debthttps://files.consumerfinance.gov/f/documents/cfpb_debt -collection-quantitative-disclosure-testing_report.pdf -collection-quantitative-disclosure-testing_report.pdf
(hereinafter CFPB, (hereinafter CFPB, Disclosure of ~~Tim e~~Time-Barred Debt and Revival: Findings, 2020); and ICF, , 2020); and ICF, Methodology Report, ,
2020. 2020.
73 Ryan Sandler 73 Ryan Sandler and Charles J. Romeo, and Charles J. Romeo, The Effect of Debt Collection Laws on Access to Credit,, CFPB, Office of CFPB, Office of
Research, Working Paper no. 2018-01, February 12, 2018, at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=Research, Working Paper no. 2018-01, February 12, 2018, at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
3124954; Viktar Fedaseyeu, 3124954; Viktar Fedaseyeu, Debt Collection Agencies and the Supply of ~~Consum er~~Consumer Credit, Federal, Federal Reserve Bank of Reserve Bank of
Philadelphia, Working Paper no. Philadelphia, Working Paper no. ~~15-23, June 19, 2015~~20-06, February 2020, at https://www.philadelphiafed.org/, at https://www.philadelphiafed.org/-/media/research-and-data/research-and-data/
publications/working-papers/publications/working-papers/~~2015/~~2020/wp20-06.pdf?la=en; and Julia; and Julia Fonseca, Katherine Strair, and Basit Zafar, Fonseca, Katherine Strair, and Basit Zafar, Access to Credit and
Financial Health: Evaluating the ~~Im pact~~Impact of Debt Collection , Federal, Federal Reserve Bank of NewReserve Bank of New York, Staff Report no. 814, York, Staff Report no. 814,
May 2017, at https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr814.pdf?la=en. May 2017, at https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr814.pdf?la=en.
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Appendix summarizes the Appendix summarizes the ~~bil s~~bills passed by the House or marked up by the House Financial passed by the House or marked up by the House Financial
Services Committee in the 116th Congress. Services Committee in the 116th Congress.
The COVID-19 Pandemic and Debt Collection
The economic impact of the Coronavirus Disease The economic impact of the Coronavirus Disease 2019 (COVID-19) pandemic has caused many Americans2019 (COVID-19) pandemic has caused many Americans to to
loselose income and face financial hardship.74 The situation has caused some consumersincome and face financial hardship.74 The situation has caused some consumers to have trouble paying their to have trouble paying their
debts.75 debts.75
On May 15, 2020, the House passed the On May 15, 2020, the House passed the ~~Health and Economic Recovery Omnibus Emergency Solutions Act~~
~~(HEROES Act; H.R. 6800).76 Among other provisions, Section 110402 would ban debt col ectors from~~ Heroes Act (H.R. 6800), and on October 1, 2020, the House passed an updated version of the bil (H.R. 925).76 Both bil s have essentially identical language on debt col ection in Division K, Title IV, Section 110402-110404 (H.R. 6800) and Division O, Title IV, Sections 402-404 (H.R. 925). Among other provisions, in Title IV of Division O, Section 402 of the updated bil would ban debt col ectors from col ecting col ecting
on a debt (such as garnishment or seizing bank account assets), enforcing a security intereston a debt (such as garnishment or seizing bank account assets), enforcing a security interest (such as repossession (such as repossession
or foreclosure),or foreclosure), or threatening to take an action on a debt during the COVID-19 pandemic and for 120 days or threatening to take an action on a debt during the COVID-19 pandemic and for 120 days
~~afterwards~~afterward. Section . Section ~~110402~~402 also would ban debt col ectors also would ban debt col ectors from charging additional fees and interestfrom charging additional fees and interest on debts that on debts that
become past due during this period. Section become past due during this period. Section ~~110403~~403 of this title defines appropriate repayment periods for different types of defines appropriate repayment periods for different types of
past-due debts after the Section past-due debts after the Section ~~110402~~402 period ends. Private-sector period ends. Private-sector debt col ectorsdebt col ectors would be able to use a credit would be able to use a credit
facility established in Section facility established in Section ~~110404~~404 of this title if they were to if they were to ~~automatical y~~automatically grant loan forbearance to grant loan forbearance to ~~consumers~~ consumers who are who are
experiencing financial hardship and request loan forbearance within the COVID-19 pandemic period and up to 120 experiencing financial hardship and request loan forbearance within the COVID-19 pandemic period and up to 120
~~days afterwards.~~
~~Sections 110402 and 110403 of the HEROES~~days afterward. In Title IV of Division O, Sections 402 and 403 of the updated Heroes Act would provide debt relief Act would provide debt relief for consumers facing financial hardship for consumers facing financial hardship
during the COVID-19 pandemic. Some observeduring the COVID-19 pandemic. Some observe that these provisionsthat these provisions could also encourage some consumerscould also encourage some consumers not not
to pay their debts, even if they have not been to pay their debts, even if they have not been ~~financial y~~financially impacted by the COVID-19 pandemic.77 impacted by the COVID-19 pandemic.77
Communication Frequency
The communication frequency standards proposed in the CFPB’s rule continue to be a The communication frequency standards proposed in the CFPB’s rule continue to be a
contentious issue. As mentioned in the contentious issue. As mentioned in the “Communication” section, the CFPB’s proposed section, the CFPB’s proposed
regulation would limit debt collector phone regulation would limit debt collector phone ~~cal s~~calls to seven times in a seven-day period and would to seven times in a seven-day period and would
prohibit debt collectors from making prohibit debt collectors from making ~~cal s~~calls within a week after speaking by phone to a consumer. within a week after speaking by phone to a consumer.
In addition, debt collectors could use technologies such as email or text message without limit, In addition, debt collectors could use technologies such as email or text message without limit,
unless consumers were to opt out. The proposal would set standards on contact frequency, which unless consumers were to opt out. The proposal would set standards on contact frequency, which
~~could reduce lawsuits relating to legal uncertainty, benefitting both debt collectors and~~
~~consumers.78~~
~~Some observers disagree about whether the CFPB’s proposed communication frequency~~
~~standards would be at the right levels. Some industry representatives argue that cal frequency~~

74 For background74 For background on the economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic in the United on the economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic in the United
States, seeStates, see ~~CRS~~ CRS Insight IN11388, Insight IN11388, COVID-19: U.S. ~~Econom ic~~Economic Effects, by Rena S. Miller and Marc Labonte. , by Rena S. Miller and Marc Labonte.
75 During the COVID-19 pandemic, some consumer relief options have been available for consumers with financial 75 During the COVID-19 pandemic, some consumer relief options have been available for consumers with financial
hardship. For example, hardship. For example, loan forbearance has become a common form of consumer relief during has become a common form of consumer relief during the COVID-19 the COVID-19
pandemic.pandemic. Loan forbearance plans are agreements allowingLoan forbearance plans are agreements allowing ~~borrowers~~ borrowers to reduce or suspendto reduce or suspend payments for a short period payments for a short period
of time, providing extended time for consumers to become current on their payments and repay the amounts owed. of time, providing extended time for consumers to become current on their payments and repay the amounts owed.
~~T hese~~These plans do not forgive unpaid loan payments. For more information on consumer loan forbearance during the plans do not forgive unpaid loan payments. For more information on consumer loan forbearance during the
COVID-19 pandemic, includingCOVID-19 pandemic, including the impact of the CARESthe impact of the CARES Act (P.L. 116-136) and other federal regulatory efforts, see Act (P.L. 116-136) and other federal regulatory efforts, see
CRSCRS Report R46356, Report R46356, COVID 19: ~~Consum er~~Consumer Loan Forbearance and Other Relief Options, coordinated by Cheryl R. , coordinated by Cheryl R.
Cooper. For resources for consumers having trouble paying their debts duringCooper. For resources for consumers having trouble paying their debts during the COVID-19 pandemic, seethe COVID-19 pandemic, see Kristin Kristin
Dohn, Dohn, Dealing with Debt During the Coronavirus ~~Pandem ic~~Pandemic: Tips to Help Ease the ~~Im pact~~Impact, CFPB, June, CFPB, June 17, 2020, at 17, 2020, at
https://www.consumerfinance.gov/about-us/blog/coronavirus-and-dealing-debt-tips-help-ease-impact/. https://www.consumerfinance.gov/about-us/blog/coronavirus-and-dealing-debt-tips-help-ease-impact/.
76 Division O, Title IV, Sections 402-404 of the updated Heroes~~76 Sections 110402-110404 of the HEROES~~ Act apply to creditors Act apply to creditors ~~as well as~~and debt collectors. For more information on debt collectors. For more information on
~~the HEROES~~ the Heroes Act’s consumer loan provisions, see CRSAct’s consumer loan provisions, see CRS Insight IN11405, Insight IN11405, ~~HEROES~~Heroes Act (H.R. 6800/H.R. 925): Selected
~~Consum er~~Consumer Loan Provisions, by Cheryl R. Cooper. , by Cheryl R. Cooper.
77 ACA International: 77 ACA International: ~~T he~~The Association of Credit and Collection Professionals, Association of Credit and Collection Professionals, ARM Industry Thoughts on the HEROES
Act, 2020, https://www.acainternational.org/assets/federal-advocacy-updates-covid-19/p6-arm-heroes-act-flyer.pdf. , 2020, https://www.acainternational.org/assets/federal-advocacy-updates-covid-19/p6-arm-heroes-act-flyer.pdf.
~~78 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23370-23371, May 21, 2019.~~
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~~limits~~ could reduce lawsuits relating to legal uncertainty, benefitting both debt collectors and consumers.78 Some observers disagree about whether the CFPB’s proposed communication frequency standards would be at the right levels. Some industry representatives argue that call frequency limits may make it more difficult to reach and follow up with consumers, increasing the cost and may make it more difficult to reach and follow up with consumers, increasing the cost and
length of time to resolve debts.79 Some consumer groups argue that length of time to resolve debts.79 Some consumer groups argue that ~~cal~~ call frequency limits should frequency limits should
be lowered.80 A CFPB survey found that most consumers considered four or more be lowered.80 A CFPB survey found that most consumers considered four or more ~~cal s~~calls a week to a week to
be too much contact, and some take this as evidence that the phone be too much contact, and some take this as evidence that the phone ~~cal limit~~ call limit should be lower.81 In should be lower.81 In
addition, although some commentators believe that addition, although some commentators believe that ~~al owing~~allowing debt collectors to send unlimited debt collectors to send unlimited
emails and text messages could lead to consumer abuse, others argue that these new technologies emails and text messages could lead to consumer abuse, others argue that these new technologies
could be convenient for consumers and reduce debt collection costs. The CFPB’s survey could be convenient for consumers and reduce debt collection costs. The CFPB’s survey
suggested that most consumers preferred email over other types of communication methods.82 suggested that most consumers preferred email over other types of communication methods.82
Some argue that because texts or emails may cost money for consumers to receive, these should Some argue that because texts or emails may cost money for consumers to receive, these should
be opt-in communications.83 For example, H.R. 5021 (sebe opt-in communications.83 For example, H.R. 5021 (see Table A-1) would prohibit a debt ) would prohibit a debt
collector from contacting a consumer by email or text message without a consumer’s opt-in collector from contacting a consumer by email or text message without a consumer’s opt-in
consent for those communication methods, in contrast with the CFPB’s proposal.consent for those communication methods, in contrast with the CFPB’s proposal.
Time-Barred and Obsolete Debt
The proposed treatment of time-barred and obsolete debt in the CFPB’s rule is a contentious The proposed treatment of time-barred and obsolete debt in the CFPB’s rule is a contentious
issue. Consumers are not always aware of statute of limitation rules and might not know that a issue. Consumers are not always aware of statute of limitation rules and might not know that a
debt is no longer legallydebt is no longer legally owed. This ignorance can cause consumer harm in a few different ways. owed. This ignorance can cause consumer harm in a few different ways.
First, consumers may pay debts that they would choose not to pay or not prioritize paying if they First, consumers may pay debts that they would choose not to pay or not prioritize paying if they
knew they could no longer be sued on the debt. In addition, as mentioned in the “Consumer knew they could no longer be sued on the debt. In addition, as mentioned in the “Consumer
Experiences” section, time-barred debts can sometimes be revived if a borrower makes a payment Experiences” section, time-barred debts can sometimes be revived if a borrower makes a payment
or acknowledges the debt in writing. In these cases, consumers can again be sued for this debt, or acknowledges the debt in writing. In these cases, consumers can again be sued for this debt,
and the statute of limitations is restarted. A debt is considered and the statute of limitations is restarted. A debt is considered obsolete when it can no longer be when it can no longer be
included in a consumer’s credit report, generally after seven years. Consumers may not be aware included in a consumer’s credit report, generally after seven years. Consumers may not be aware
of when debts can no longer be included on credit reports. of when debts can no longer be included on credit reports.
In its rulemaking, the CFPB has proposed mandating time-barred debt and revival disclosures for In its rulemaking, the CFPB has proposed mandating time-barred debt and revival disclosures for
consumers (but not for obsolete debts). The time-barred and revival disclosures developed by the consumers (but not for obsolete debts). The time-barred and revival disclosures developed by the
CFPB have led to more consumer comprehension of these concepts.84 However, the CFPB’s CFPB have led to more consumer comprehension of these concepts.84 However, the CFPB’s
qualitative testing suggested some consumers were confused about time-barred debt, obsolete qualitative testing suggested some consumers were confused about time-barred debt, obsolete
debt, and revival, even with disclosures provided.85 In addition, the CFPB found that although a debt, and revival, even with disclosures provided.85 In addition, the CFPB found that although a
majority of respondents answered comprehension questions correctly when viewing these majority of respondents answered comprehension questions correctly when viewing these
~~disclosures, the comprehension gains were more pronounced for those with higher education and~~
~~income levels.86 For these reasons, some argue that the CFPB should ban the collection of time-~~
~~barred debts.87~~

78 CFPB, “Debt Collection Practices (Regulation F),” 84 Federal Register 23370-23371, May 21, 2019. 79 Letter from ACA International, the Association of Credit & Collection Professionals, to CFPB Comment Intake79 Letter from ACA International, the Association of Credit & Collection Professionals, to CFPB Comment Intake –
—Debt Collection, September 17, 2019, pp. 73Debt Collection, September 17, 2019, pp. 73 -79, at https://www.acainternational.org/assets/advocacy-resources/aca--79, at https://www.acainternational.org/assets/advocacy-resources/aca-
commentcomment -cfpb-reg-f-9.17.19.pdf. -cfpb-reg-f-9.17.19.pdf.
80 National Consumer Law 80 National Consumer Law Center (NCLC), Center (NCLC), CFPB Debt Collection Rule Must Protect Consumers, Not Abusive
Collectors, May 2019, at https://www.nclc.org/images/pdf/debt_collection/cfpb-debt-collection-rule-summary-, May 2019, at https://www.nclc.org/images/pdf/debt_collection/cfpb-debt-collection-rule-summary-
2019.pdf (hereinafter NCLC, 2019.pdf (hereinafter NCLC, CFPB Debt Collection Rule Must Protect ~~Consum ers~~Consumers, 2019). , 2019).
81 CFPB, 81 CFPB, Consumer Experiences with Debt Collection, p. 31. , p. 31.
82 CFPB, 82 CFPB, Consumer Experiences with Debt Collection, p. 37. , p. 37.
83 NCLC, 83 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019. , 2019.
84 CFPB, 84 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, p. 25. , 2020, p. 25.
85 Fors Marsh Group,85 Fors Marsh Group, Debt Collection Validation Notice Research: Summary,, 2016, pp. 35-39. 2016, pp. 35-39.
~~86 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, pp. 25-27.~~
~~87 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019.~~
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~~Validation Issues~~
~~Debt validation~~ Congressional Research Service 12 The Debt Collection Market and Selected Policy Issues disclosures, the comprehension gains were more pronounced for those with higher education and income levels.86 For these reasons, some argue that the CFPB should ban the collection of time-barred debts.87 Validation Issues Debt validation is another significant policy issue in this market, where debt collectors may is another significant policy issue in this market, where debt collectors may
contact the wrong consumer or collect for the wrong amount. If a consumer receives a debt contact the wrong consumer or collect for the wrong amount. If a consumer receives a debt
collection validation notice from a debt collector, no debt collector database or other resource collection validation notice from a debt collector, no debt collector database or other resource
currently exists to help the consumer verify that the debt collector owns the debt or that the currently exists to help the consumer verify that the debt collector owns the debt or that the
information about the debt is accurate. The consumer would need to recognize the debt in order to information about the debt is accurate. The consumer would need to recognize the debt in order to
believe that they owe it. believe that they owe it.
Some of these verification issues may exist because debt collectors are not required to obtain a Some of these verification issues may exist because debt collectors are not required to obtain a
debt’s full files from the original lender.88 Sometimes, the original lender conveys only basic debt’s full files from the original lender.88 Sometimes, the original lender conveys only basic
information to the debt collector—unless a consumer disputes the debt—due to expense and information to the debt collector—unless a consumer disputes the debt—due to expense and
technical complications between systems.89 For example, creditors sometimes do not provide technical complications between systems.89 For example, creditors sometimes do not provide
copies of underlying account documentation to debt collectors, such as account statements or copies of underlying account documentation to debt collectors, such as account statements or
agreements.90 In these cases, debt collectors would obtain these documents from creditors only agreements.90 In these cases, debt collectors would obtain these documents from creditors only
when needed (e.g., if a consumer files an FDCPA dispute).91 This practice reduces costs for debt when needed (e.g., if a consumer files an FDCPA dispute).91 This practice reduces costs for debt
collectors, but it may lead to debt transfer information issues between creditors and debt collectors, but it may lead to debt transfer information issues between creditors and debt
collectors. collectors.
According to the CFPB, “there are often substantial deficiencies in the quality and quantity of According to the CFPB, “there are often substantial deficiencies in the quality and quantity of
information collectors receive at placement or sale of the debt that frequently result in collectors information collectors receive at placement or sale of the debt that frequently result in collectors
contacting the wrong consumer, for the wrong amount, or for debts that the collector is not contacting the wrong consumer, for the wrong amount, or for debts that the collector is not
entitled to collect.”92 CFPB research suggests that many debt entitled to collect.”92 CFPB research suggests that many debt ~~col ectors~~collectors might undergo little might undergo little
review of creditor data to check for potential inaccuracies or unreliability.93 In addition, lenders review of creditor data to check for potential inaccuracies or unreliability.93 In addition, lenders
often do not make representations as to the accuracy of the transferred information that the debt often do not make representations as to the accuracy of the transferred information that the debt
collector receives.94 Moreover, debt collectors may not receive much information about whether a collector receives.94 Moreover, debt collectors may not receive much information about whether a
consumer has disputed the same debt in the past, and as a debt gets older and possibly resold, consumer has disputed the same debt in the past, and as a debt gets older and possibly resold,
information may decay. Some debt collectors also may file litigationinformation may decay. Some debt collectors also may file litigation against a consumer without 86 CFPB, Disclosure of Time-Barred Debt and Revival: Findings, 2020, pp. 25-27. 87 NCLC, CFPB Debt Collection Rule Must Protect Consumers, 2019. ~~against a consumer without~~
~~the underlying documentation95 as creditors often obtain default judgments because many~~
~~consumers do not attend their court hearings.96~~
~~Inaccurate information about debts can harm consumers. For example, a consumer might pay~~
~~debts they are not obligated to pay. In addition, validation issues can lead to more disputes and~~

88 CFPB, 88 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking: Outline of Proposals Under
Consideration and Alternatives Considered, July 27, 2016, pp. 6-7, at https://files.consumerfinance.gov/f/documents/, July 27, 2016, pp. 6-7, at https://files.consumerfinance.gov/f/documents/
20160727_cfpb_Outline_of_proposals.pdf (hereinafter CFPB, 20160727_cfpb_Outline_of_proposals.pdf (hereinafter CFPB, ~~Sm all~~Small Business Review Panel for Debt Collector ~~and~~
and Debt Buyer ~~Rulem aking~~Rulemaking). ).
89 CFPB, 89 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , pp. 6-7. , pp. 6-7.
90 CFPB, 90 CFPB, Study of Third-Party Debt Collection Operations, pp. 22-23. , pp. 22-23.
91 CFPB, 91 CFPB, Study of Third-Party Debt Collection Operations, pp. 23-24. , pp. 23-24.
92 CFPB, 92 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , p. 6. , p. 6.
93 CFPB, 93 CFPB, Study of Third-Party Debt Collection Operations, p. 22. , p. 22.
94 CFPB, 94 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking ~~, p. 8.~~
~~95 For this reason, the CFPB also was considering a requirement that debt collectors have “reasonable support” legally~~
~~(e.g., necessary documentation) before filing litigation against consumers. T his requirement was not included in the~~
~~CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , p. 12.~~
~~96 For this reason, the CFPB considered creating a requirement that debt collectors disclose to consumers that a court~~
~~could rule against them if consumers do not defend themselves in court. T his requirement was not included in the~~
~~CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , pp.~~
~~18-19.~~
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, p. 8. Congressional Research Service 13 The Debt Collection Market and Selected Policy Issues the underlying documentation95 as creditors often obtain default judgments because many consumers do not attend their court hearings.96 Inaccurate information about debts can harm consumers. For example, a consumer might pay debts they are not obligated to pay. In addition, validation issues can lead to more disputes and complaints, requiring consumers and debt collectors to spend time disputing debts or invalid complaints, requiring consumers and debt collectors to spend time disputing debts or invalid
lawsuits. lawsuits.
Part of the reason that many consumers report inaccuracies with their debts in collections may be Part of the reason that many consumers report inaccuracies with their debts in collections may be
due to limiteddue to limited information on debt validationinformation on debt validation notices. Currently, most validation notices do not notices. Currently, most validation notices do not
include some elements, such as the original creditor or original amount owed. The information in include some elements, such as the original creditor or original amount owed. The information in
the notice might be insufficient for some consumers to recognize their debts.97 To address some of the notice might be insufficient for some consumers to recognize their debts.97 To address some of
these concerns, the CFPB proposed rule would clarify additional information debt collectors these concerns, the CFPB proposed rule would clarify additional information debt collectors
should disclose to consumers in the validation notice. However, some argue that validation errors should disclose to consumers in the validation notice. However, some argue that validation errors
will not be reduced without mandating that debt collectors improve the quality and transparency will not be reduced without mandating that debt collectors improve the quality and transparency
of their information and recordkeeping prior to taking action to collect the debt. Others argue that of their information and recordkeeping prior to taking action to collect the debt. Others argue that
this type of regulation could be prohibitively expensive and overly burdensome for debt this type of regulation could be prohibitively expensive and overly burdensome for debt
collectors.98 collectors.98
The CFPB has announced enforcement actions regarding inaccurate or unverifiable information The CFPB has announced enforcement actions regarding inaccurate or unverifiable information
used during the debt collection process.99 Although the CFPB has considered debt information used during the debt collection process.99 Although the CFPB has considered debt information
validation proposals, the CFPB did not include any requirements relating to debt information validation proposals, the CFPB did not include any requirements relating to debt information
transfer or validation in its proposed rule.100transfer or validation in its proposed rule.100
Medical Debt and Credit Reporting
Medical debt collection raises specific policy issues relating to inconsistent Medical debt collection raises specific policy issues relating to inconsistent ~~bil ing~~billing and reporting and reporting
practices. According to a 2014 CFPB study, consumers are unlikely to know how much various practices. According to a 2014 CFPB study, consumers are unlikely to know how much various
medical services cost in advance, particularly those associated with accidents and emergencies.101 medical services cost in advance, particularly those associated with accidents and emergencies.101
People often have difficulty understanding co-pays and health insurance deductibles, and medical People often have difficulty understanding co-pays and health insurance deductibles, and medical
~~debts are often transferred to debt collectors after different periods of time, depending on the~~
~~medical provider. Therefore, medical debts can appear on people’s credit reports inconsistently.~~
~~To address inconsistency concerns, the Internal Revenue Service (IRS) announced on December~~
~~31, 2014, a final rule requiring the separation of bil ing and collection policies of nonprofit~~
~~hospitals.102 Under the rule, hospitals that have or are pursuing tax-exempt status are required to~~
~~make reasonable efforts to determine whether their patients are eligible for financial assistance~~
~~before engaging in “extraordinary collection actions,” which may include turning a debt over to a~~

~~97 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking , pp. 6-7.~~
~~98 For example, during the small business review panel process, the public discussion outline discussed how the option~~
~~of transferring all account -level documentation during the debt transfer process would be an overly burdensome~~
~~requirement. See CFPB, Sm all Business Review Panel for Debt Collector and Debt Buyer Rulem aking , p. 9.~~
99 For example, CFPB, Consent Order: Portfolio Recovery Associates, LLC, 95 For this reason, the CFPB also was considering a requirement that debt collectors have “reasonable support” legally (e.g., necessary documentation) before filing litigation against consumers. This requirement was not included in the CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, p. 12. 96 For this reason, the CFPB considered creating a requirement that debt collectors disclose to consumers that a court could rule against them if consumers do not defend themselves in court. This requirement was not included in the CFPB’s proposed rule. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, pp. 18-19. 97 CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, pp. 6-7. 98 For example, during the small business review panel process, the public discussion outline discussed how the option of transferring all account-level documentation during the debt transfer process would be an overly burdensome requirement. See CFPB, Small Business Review Panel for Debt Collector and Debt Buyer Rulemaking, p. 9. 99 For example, CFPB, Consent Order: Portfolio Recovery Associates, LLC, File no. 2015-CFPB-0023, September 9, File no. 2015-CFPB-0023, September 9,
2015, at https://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; and 2015, at https://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; and
CFPB, CFPB, Consent Order: Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit ~~Managem en t~~Management, Inc. and
Asset Acceptance Capital Corp., File, File no. 2015-CFPB-0022, September 9, 2019, at https://files.consumerfinance.gov/f/no. 2015-CFPB-0022, September 9, 2019, at https://files.consumerfinance.gov/f/
201509_cfpb_consent-order-encore-capital-group.pdf. 201509_cfpb_consent-order-encore-capital-group.pdf.
100 For example, during 100 For example, during the small businessthe small business review panel process, the public discussionreview panel process, the public discussion outline includedoutline included proposals proposals
around the integrity of information, including the transfer of debts and recordkeeping; the acquisition and transfer of around the integrity of information, including the transfer of debts and recordkeeping; the acquisition and transfer of
accounts; and the process for obtaining information and reviews of information at various stages accounts; and the process for obtaining information and reviews of information at various stages ~~o f~~of the debt collection the debt collection
process. Seeprocess. See CFPB, Small~~CFPB,~~ ~~Sm all~~ Business Review Panel for Debt Collector and Debt Buyer ~~Rulem aking~~Rulemaking, pp. 4-8., pp. 4-8.
101 See101 See CFPB, CFPB, Consumer Credit Reports: A Study of Medical and Non-Medical Collections, December 2014, at , December 2014, at
http://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credithttp://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit ~~-medical-and-non-medical-collections.pdf.~~
~~102 Department of the Treasury, Internal Revenue Service (IRS),~~ ~~New Requirements for 501(c)(3) Hospitals Under the~~
~~Affordable Care Act, at https://www.irs.gov/charities-non-profits/charitable-organizations/requirements-for-501c3-~~
~~hospitals-under-the-affordable-care-act-section-501r (hereinafter IRS,~~ ~~New Requirem ents for 501(c)(3) Hospitals~~
~~Under the Affordable Care Act~~).
~~Congressional Research Service~~
14

~~link to page 20~~ ~~The Debt Collection Market and Selected Policy Issues~~

~~collection agency or garnishing wages. In short, tax-exempt hospitals must al ow patients 120~~
~~days from the date of the first bil ing statement to pay the obligation before initiating~~ -medical-and-non-medical-collections.pdf. Congressional Research Service 14 link to page 20 The Debt Collection Market and Selected Policy Issues debts are often transferred to debt collectors after different periods of time, depending on the medical provider. Therefore, medical debts can appear on people’s credit reports inconsistently. To address inconsistency concerns, the Internal Revenue Service (IRS) announced on December 31, 2014, a final rule requiring the separation of billing and collection policies of nonprofit hospitals.102 Under the rule, hospitals that have or are pursuing tax-exempt status are required to make reasonable efforts to determine whether their patients are eligible for financial assistance before engaging in “extraordinary collection actions,” which may include turning a debt over to a collection agency or garnishing wages. In short, tax-exempt hospitals must allow patients 120 days from the date of the first billing statement to pay the obligation before initiating collection collection
procedures.103 The IRS rule impacts only nonprofit hospitals, but on September 15, 2017, the procedures.103 The IRS rule impacts only nonprofit hospitals, but on September 15, 2017, the
three major credit reporting agencies—Experian, Equifax, and TransUnion104—established a 180-three major credit reporting agencies—Experian, Equifax, and TransUnion104—established a 180-
day (six-month) waiting period after the date of first delinquency before posting a medical day (six-month) waiting period after the date of first delinquency before posting a medical
collection of any type on a consumer credit report.105 collection of any type on a consumer credit report.105
Concerns about the impact of medical debts on credit reports continue. Some observers may Concerns about the impact of medical debts on credit reports continue. Some observers may
believe it is unfair for medical debts to appear on credit reports because these debts are believe it is unfair for medical debts to appear on credit reports because these debts are ~~general y~~
generally incurred for incurred for ~~medical y~~medically necessary reasons and are less likely to indicate whether someone is necessary reasons and are less likely to indicate whether someone is
~~financial y~~financially responsible. For example, the CFPB found that medical debts may be less reliable responsible. For example, the CFPB found that medical debts may be less reliable
predictors of creditworthiness or credit performance than other types of debts.106 H.R. 5330 predictors of creditworthiness or credit performance than other types of debts.106 H.R. 5330
would prohibit furnishing medical debt to consumer reporting agencies for a year107 and would would prohibit furnishing medical debt to consumer reporting agencies for a year107 and would
prohibit medical debt related to prohibit medical debt related to ~~medical y~~medically necessary procedures from inclusion in consumer necessary procedures from inclusion in consumer
credit reports (secredit reports (see Table A-1).108 .108
Federal, State, and Local Government Debt Exemptions
Currently, government fines and fees are often exempt from the FDCPA.109 Therefore, if a Currently, government fines and fees are often exempt from the FDCPA.109 Therefore, if a
government fine or fee, such as a municipal utility government fine or fee, such as a municipal utility ~~bil~~ bill, traffic ticket, or court debt, creates a debt 102 Department of the Treasury, Internal Revenue Service (IRS), New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act, at https://www.irs.gov/charities-non-profits/charitable-organizations/requirements-for-501c3-hospitals-under-the-affordable-care-act-section-501r (hereinafter IRS, New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act). 103 See IRS, New ~~, traffic ticket, or court debt, creates a debt~~
~~that is transferred to a debt collector, that collector is not always required to comply with the~~
~~FDCPA. Recently, as more government debts have been outsourced to debt collectors, reports of~~
~~aggressive debt collection practices for these types of debt have grown.110 Some federal~~
~~government programs, such as the federal student loan program, by statute have flexible~~
~~repayment terms (e.g., income-driven repayment plans);111 however, when these types of debts go~~

~~103 See IRS,~~ ~~New~~ Requirements for 501(c)(3) Hospitals Under the Affordable Care Act. .
104 See104 See Experian, “Medical Debt andExperian, “Medical Debt and Your Credit Score:Your Credit Score: Here’s What You NeedHere’s What You Need to Know,” press release, Augustto Know,” press release, August 8, 8,
2017, at https://www.experian.com/blogs/ask-experian/medical-debt-and-your-credit2017, at https://www.experian.com/blogs/ask-experian/medical-debt-and-your-credit -score/. -score/.
105 P.L. 115-174, §302 amends the Fair Credit Reporting Act to provide veterans with credit reporting protections 105 P.L. 115-174, §302 amends the Fair Credit Reporting Act to provide veterans with credit reporting protections
relating to medical debt, extend the waiting period for medical debtsrelating to medical debt, extend the waiting period for medical debts to be includedto be included in credit reports to one year, and in credit reports to one year, and
remove paid or settled medicalremove paid or settled medical debts from veterans’ credit reports. debts from veterans’ credit reports.
106 See 106 See Kenneth P. Brevoort and Michelle Kambara, Kenneth P. Brevoort and Michelle Kambara, Data Point: Medical Debt and Credit Scores, CFPB, May 2014, at , CFPB, May 2014, at
http://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credithttp://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit -scores.pdf. -scores.pdf.
107 107 ~~T he~~The prohibition lasts for a year after the billing date or a year after the consumer’s last debt payment, whichever is prohibition lasts for a year after the billing date or a year after the consumer’s last debt payment, whichever is
later. later.
108 H.R. 3621, the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and 108 H.R. 3621, the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and ~~T ransparency~~Transparency Act of Act of
2020 (Comprehensive CREDIT2020 (Comprehensive CREDIT Act), which passedAct), which passed the House duringthe House during ~~the 116 th~~ the 116th Congress, also would Congress, also would prohibit prohibit
furnishing medical debtfurnishing medical debt to consumer reporting agencies for a year and wouldto consumer reporting agencies for a year and would prohibit medical debtprohibit medical debt related to medically related to medically
necessary procedures from inclusion in consumer credit reports. It also wouldnecessary procedures from inclusion in consumer credit reports. It also would remove paid or remove paid or ~~sett led~~settled medical medical debts debts
from credit reports. For more information on this bill, see CRSfrom credit reports. For more information on this bill, see CRS Report R44125, Report R44125, ~~Consum er~~Consumer Credit Reporting, Credit
Bureaus, Credit Scoring, and Related Policy Issues, by Cheryl R. Cooper and Darryl E. Getter. , by Cheryl R. Cooper and Darryl E. Getter.
109 109 ~~T he~~The FDCPA defines a FDCPA defines a debt as as money consumers must pay “money consumers must pay “ arising out of a transaction in which the money, arising out of a transaction in which the money,
property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household
purposes.” Seepurposes.” See 15 U.S.C.15 U.S.C. ~~§1692a(5).~~
~~110 For example, Blake Ellis and Melanie Hicken, “T he Secret World of Government Debt Collection,” CNN Money,~~
~~February 17, 2015; and Blake Ellis and Melanie Hicken, “ T hreatening Letters from a Government Debt Collector,”~~
CNN Money, February 17, 2015.
~~111 For more information on the federal student loan program and income-driven repayment plans, see CRS Report~~
~~R45931,~~ ~~Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program : Term s and~~
~~Conditions for Borrowers, by David P. Smole.~~
~~Congressional Research Service~~
15

~~link to page 20~~ ~~The Debt Collection Market and Selected Policy Issues~~

§1692a(5). Congressional Research Service 15 link to page 20 The Debt Collection Market and Selected Policy Issues that is transferred to a debt collector, that collector is not always required to comply with the FDCPA. Recently, as more government debts have been outsourced to debt collectors, reports of aggressive debt collection practices for these types of debt have grown.110 Some federal government programs, such as the federal student loan program, by statute have flexible repayment terms (e.g., income-driven repayment plans);111 however, when these types of debts go into default and are transferred to a debt collector, the consumer loses some of these consumer into default and are transferred to a debt collector, the consumer loses some of these consumer
protections. protections.
H.R. 3948 would make state and local debts collected by debt collectors subject to the FDCPA, H.R. 3948 would make state and local debts collected by debt collectors subject to the FDCPA,
and H.R. 4403 would make many federal debts collected by debt collectors subject to the FDCPA and H.R. 4403 would make many federal debts collected by debt collectors subject to the FDCPA
and other rules. H.R. 5287 would prohibit debt collectors from collecting or garnishing wages for and other rules. H.R. 5287 would prohibit debt collectors from collecting or garnishing wages for
federal student loan debts that would not require payment under an income-driven repayment federal student loan debts that would not require payment under an income-driven repayment
plan and would subject these debt collectors to the FDCPA (plan and would subject these debt collectors to the FDCPA (seesee Table A-1).
Conclusion
The debt collection market continues to be an important part of ensuring that consumers have The debt collection market continues to be an important part of ensuring that consumers have
access to a robust consumer credit market; however, the potential for consumer harm may make access to a robust consumer credit market; however, the potential for consumer harm may make
consumer protection laws and regulations particularly important. The regulation of the debt consumer protection laws and regulations particularly important. The regulation of the debt
collection market may continue to be an active policy issue because it impacts many consumers collection market may continue to be an active policy issue because it impacts many consumers
going through the debt collection process and the efficiency of consumer credit markets in the going through the debt collection process and the efficiency of consumer credit markets in the
United States. As the CFPB finalizes and implements its debt collection rulemaking, stakeholders United States. As the CFPB finalizes and implements its debt collection rulemaking, stakeholders
may be able to see how new regulations could impact the market. For these reasons, the debt may be able to see how new regulations could impact the market. For these reasons, the debt
collection market may continue to be the subject of congressional interest and legislative collection market may continue to be the subject of congressional interest and legislative
~~proposals.~~
~~Congressional Research Service~~
proposals. 110 For example, Blake Ellis and Melanie Hicken, “The Secret World of Government Debt Collection,” CNN Money, February 17, 2015; and Blake Ellis and Melanie Hicken, “Threatening Letters from a Government Debt Collector,” CNN Money, February 17, 2015. 111 For more information on the federal student loan program and income-driven repayment plans, see CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers, by David P. Smole. Congressional Research Service 16 16

The Debt Collection Market and Selected Policy Issues

Appendix.
Debt Collection Market Legislation
Table A-1. Legislation Passed by the House or Marked Up and Ordered to Be
Reported by the House Financial Services Committee During the 116th Congress
(2019-2020), Primarily Related to the Debt Collection Market
Bill Number
Bill Title
Summary of Bill
H.R. 3948 H.R. 3948
Debt Col ection Debt Col ection Practices Practices
Makes state and local debts, such as municipal utility Makes state and local debts, such as municipal utility
Harmonization Act Harmonization Act
bil s, bil s, traffic tickets,traffic tickets, and court debts, col ectedand court debts, col ected by a by a
debt col ectordebt col ector subject to the Fair Debt Col ection subject to the Fair Debt Col ection
Practices Act (FDCPA), among other things. Practices Act (FDCPA), among other things.

H.R. 4403 H.R. 4403
Stop Debt Col ection Stop Debt Col ection Abuse Act Abuse Act
Makes certain federal Makes certain federal agency debts, such as a fine, agency debts, such as a fine,
fee, penalty, or other money owed to a federal fee, penalty, or other money owed to a federal
government agency that is not lessgovernment agency that is not less than 180 days than 180 days
past due, col ected by a debt col ector subject to past due, col ected by a debt col ector subject to
the FDCPA, among other things. the FDCPA, among other things.

H.R. 5001 H.R. 5001
Non-Judicial Foreclosure Non-Judicial Foreclosure Debt Debt
Makes nonjudicial foreclosure Makes nonjudicial foreclosure proceedings covered proceedings covered
Col ection Col ection Clarification Act Clarification Act
under the FDCPA. under the FDCPA.

H.R. 5003 H.R. 5003
Fair Debt Col ection Fair Debt Col ection Practices for Practices for
Prohibits a debt col ector Prohibits a debt col ector ~~from~~ from threatening the threatening the
Servicemembers Servicemembers Act Act
member’s member’s rank or security clearance,rank or security clearance, or to have the or to have the
membermember prosecuted under the Uniform Code of prosecuted under the Uniform Code of
Military Justice, among other things. Military Justice, among other things.

H.R. 5013 H.R. 5013
~~Smal~~ Small Business Fair Debt Col ection Business Fair Debt Col ection
Expands FDCPA protections to cover debts owed Expands FDCPA protections to cover debts owed
~~Practices~~Protection Act Act
by by ~~smal~~ small businesses. businesses.

H.R. 5021 H.R. 5021
Ending Debt Col ection Ending Debt Col ection ~~Harassment~~
Harassment Prohibits a debt col ectorProhibits a debt col ector ~~from~~ from contacting a contacting a
Act Act
consumer by email, consumer by email, text message,text message, or other or other
electronicelectronic means without a consumer’smeans without a consumer’s opt-in opt-in
consent to be contacted consent to be contacted ~~electronical y,~~ electronically, among among
other things. other things.

H.R. 5287 H.R. 5287
Fair Student Loan Debt Col ection Fair Student Loan Debt Col ection
Prohibits debt col ectors Prohibits debt col ectors from col ecting or from col ecting or
Practices Act Practices Act
garnishing wages for federal student loan debts that garnishing wages for federal student loan debts that
would not require payment under an income-driven would not require payment under an income-driven
repayment plan and subjects these debt col ectors repayment plan and subjects these debt col ectors
to the FDCPA, among other things. to the FDCPA, among other things.

H.R. 5330 H.R. 5330
Consumer Consumer ~~Protections~~Protection for Medical for Medical
Prohibits medical debt related to Prohibits medical debt related to ~~medical y~~medically
Debt Col ections Debt Col ections Act Act
necessary procedures necessary procedures from inclusion in consumer from inclusion in consumer
credit reports,credit reports, among other things. among other things.
Source: CompiledCompiled by the Congressionalby the Congressional Research Service.Research Service.
Notes: H.R. 5003 passed the House on March 2, 2020. H.R. 5003 passed the House on March 2, 2020. Al All other bil s wereother bil s were marked up and ordered to be marked up and ordered to be
reported by the House Financial Servicesreported by the House Financial Services ~~Committee~~ Committee during the 116th Congress. during the 116th Congress.
Author Information Cheryl R. Cooper Analyst in Financial Economics Congressional Research Service Congressional Research Service
17 17

The Debt Collection Market and Selected Policy Issues

~~Author Information~~

~~Cheryl R. Cooper~~

~~Analyst in Financial Economics~~

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