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How Debt Collection Practices would Change Once “Regulation F” Takes Effect from November 30, 2021

How Debt Collection Practices would Change Once "Regulation F" Takes Effect from November 30, 2021

COVID-19 pandemic may have slowed down the consumer finances market and thus disrupted the whole of US-based debt collection practices. In order to regulate the debt collection practices across the US, the Consumer Financial Protection Bureau launched a massive drive back in 2019.

What is Regulation F

The debt collection practices rule is an extensive revision of Regulation F, 12 CFR part 1006. Regulation F implements the Fair Debt Collection Practices Act (FDCPA), to prescribe Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA.

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Way back in May 2019, the leading federal agency for the protection of consumer finances markets,  Consumer Financial Protection Bureau (CFPB) had announced new rules and amends to existing debt collection practices under Regulation F. Nearly two and a half years later, the Regulation F with new debt-related collection rules and policies would take effect from 30 November 2021. The new Regulations F guidelines would help debtors better communicate with debt collection agencies, prohibiting anyone from dealing in these markets in an abusive or illegal manner.

As per CFPB, the new rules in Regulation F would be effective in governing certain activities of debt collectors, as that term is defined in the FDCPA. It would prevent illegal or abusive debt collection practices by providing all the parties with a model notice. This means, from 30 November, debt collectors can’t bring or threaten to bring legal action against a consumer to collect a time-barred debt.

The regulations have been sub-divided into three categories:

  • October Rule
  • December Rule
  • Global COVID-19 Pandemic – April 2021

October Final Rule highlights how debt collectors should communicate with the citizens in connection to debt collection. It focuses on prohibiting harassment or abuse, and misinformation / misrepresentations by debt collection agencies in any form

December Final Rule addresses how a debt collector should clearly mention all the information related to debt collection and approaches using a model notice carrying necessary information about a consumer’s debt to a consumer reporting agency.

Debt Collection Practices in Connection with the Global COVID-19 Pandemic – April 2021 exemplifies the steps taken under the CDC Order’s eviction moratorium and clarifies that certain misrepresentations are prohibited.

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From 30 November, debtors would have special rights against malpractices and abusive actions of any kind. This would simplify the relationship between debtors and debt collection agencies, preventing frictions between the two that often arise due to bad communication.

[To share your insights with us, please write to sghosh@martechseries.com]

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