ABA Urges CFPB to Provide Better Disclosures and Consumer Education on Time-Barred Debt

In a comment letter filed today, ABA urged the CFPB to adopt more accurate and easily understandable disclosures related to time-barred debt–which is debt that has run past any applicable statute of limitations. ABA also called on the bureau to provide more consumer information on time-barred debts.

ABA’s letter came in response a supplemental proposal that would require debt collectors to make certain disclosures if the collector knows or should know that a debt is time-barred. It would also require that debt collectors disclose, if applicable, that a payment made on a debt can revive the statute of limitations and enable the collector to sue to collect.

“ABA recommends that the bureau take responsibility for creating educational resources for consumers regarding time-barred debt and consumer options for addressing such debts, in conjunction with a more general time-barred debt disclosure,” ABA said. “This would lead to better, more accurate consumer information than the bureau’s proposed disclosures, which are unworkable, legally inaccurate, confusing, and likely to increase, not decrease, litigation over time-barred debts.”

This supplemental proposal is part of the CFPB’s overall implementation of the Fair Debt Collection Practices Act, a rulemaking that has been in progress for nearly a decade. ABA further urged the CFPB to quickly finalize the FDCPA rulemaking to provide more clarity for both industry and consumers.