House Passes the Comprehensive Debt Collection Improvement Act (H.R. 2547)
INSIGHTi
House Passes the Comprehensive Debt
Collection Improvement Act (H.R. 2547)
May 20, 2021
On May 13, 2021, the House passed the Comprehensive Debt Collection Improvement Act (H.R. 2547;
H.Rept. 117-23), which would amend laws relating to the debt collection market, including the Fair Debt
Collection Practices Act (FDCPA; 15 U.S.C. §§1692-1692f). Among other things, the bill would limit
debt collectors’ email and text messages to consumers; prohibit consumer reporting agencies from
including certain medical debts related to medically necessary procedures in consumer credit reports; and
make all federal and state government debts subject to the FDCPA. It also would provide military
servicemembers additional debt collection protections.
This Insight provides an overview of the debt collection market and its regulation, and analyzes selected
provisions of H.R. 2547. For more information about debt collection, see CRS Report R46477, The Debt
Collection Market and Selected Policy Issues, by Cheryl R. Cooper. For more information about the
FDCPA, see CRS In Focus IF11247, The Fair Debt Collection Practices Act: Legal Framework, by
Kevin M. Lewis.
Debt Collection Market and Regulation
When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation rather
than the original lender. Lenders contract with debt collectors to collect their debts. The U.S. debt
collection market is large and impacts many consumers. 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 lender or assigned debt collector trying to collect on a debt in the previous year.
Debt collectors generally expect to collect a fraction of the total value of any particular debt, knowing that
some consumers will not pay back their debts in full. Therefore, the parties can negotiate the amount and
payment schedule of the debt. If a consumer does not settle a debt, the debt owner often has several
options, such as repossessing the collateral for secured loans (e.g., car, house) or garnishing a consumer’s
wages after obtaining a court order. Debt collectors have the option, but are not required, to furnish
information about the debt to credit bureaus.
Consumers do not choose the debt collectors with whom they engage. Therefore, consumer protection
laws and regulations may be particularly consequential in this market. According to the CFPB, debt
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collection is the consumer finance market with the second-most complaints, accounting for 15% of the
total complaints received in 2020.
The FDCPA is the primary federal statute regulating the consumer debt collection market. It generally
applies only to debt collectors, not the original creditors. The FDCPA prohibits 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 communications about an alleged debt. In addition, the FDCPA requires debt collectors to send
consumers notification that discloses certain information about their debts.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) granted the CFPB
authority over the FDCPA, and it became the first federal agency empowered to write regulations to
implement the FDCPA. In November 2020 and January 2021, the CFPB finalized two new regulations
intended to clarify provisions in the FDCPA.
Selected Provisions of the Comprehensive Debt
Collection Improvement Act (H.R. 2547)
On May 13,, 2021, H.R. 2547 passed the House. Among other things, this bill, if enacted, would:
Prohibit a debt collector from contacting a consumer by email or text message without a
consumer’s opt-in consent for those communication methods. This provision is in
contrast with the CFPB’s recent regulation, which clarifies that debt collectors can use
newer technologies, such as email and text messages, to communicate with consumers
without limit; however, the rule requires a reasonable and simple method for consumers
to opt out of these types of messages.
Prohibit consumer reporting agencies from including medical debts related to medically
necessary procedures in consumer credit reports and also including other medical debts
that are less than a year old or paid.
Make federal and state government debts—including court debts—that are sold to third-
party debt collectors subject to the FDCPA and other rules. It would also limit when the
federal government can sell or transfer consumer debts to debt collectors and limit fees
charged by debt collectors on federal government debts.
Provide military servicemembers additional debt collection protections, such as barring
debt collectors from threatening servicemembers that their debt could affect their rank or
security clearances.
Require private student lenders to discharge a debt when a student becomes totally and
permanently disabled.
Prohibit debt collectors from collecting or attempting to collect time-barred debt—that is,
a debt on which the statute of limitations for filing a debt collection lawsuit has expired
under state law.
Expand the FDCPA’s definition of “debt collector” to cover certain entities that conduct
non-judicial foreclosures—that is, foreclose on homes without a court order. This
provision is in contrast with the U.S. Supreme Court’s 2019 ruling in Obduskey v.
McCarthy & Holthus LLP, where the Court interpreted the term “debt collector” to
exclude businesses engaged in nonjudicial foreclosure proceedings.
Ban the use of confessions of judgment in small business lending, which is when a small
business waives significant procedural rights in a contract.
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Ban consumer reporting agencies from including adverse information about private
student loans during the COVID-19 pandemic in credit reports.
Proponents of the bill argue that it would provide consumers new protections related to troubling debt
collection practices, while opponents of the bill have concerns that the bill could increase the cost of
credit for consumers by making debt collection more expensive or less efficient.
Author Information
Cheryl R. Cooper
Analyst in Financial Economics
Disclaimer
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