April 9, 2020: On April 7, 2020 Washington DC City Council passed the COVID-19 Response Supplemental Emergency and Temporary Amendment Act of 2020. The new rules for debt collection in Washington DC take effect immediately for a period spanning the duration of the state of emergency plus 60 days. Under the authority vested in him, the Washington DC Attorney General announced enforcement would begin immediately.
The new rules for debt collection during a state of emergency are actually a compilation of amendments to Washington DC’s current consumer protection law and prohibit:
- Debt collectors and debt buyers from initiating outbound communications to consumers regarding debts using any form of written or electronic communication including letters, emails, texts and phone calls. Debt collectors shall not be deemed to have initiated a communication with a debtor if the communication by the debt collector is in response to a request made by the debtor for said communication.
- Creditors and debt collectors from pursuing legal remedies such as lawsuits, civil actions, repossession activities, in person collections and supplementary proceedings to collect debt.
The amendment also expands the definition of claim to include a loan or obligation to pay resulting from a purchase, lease, or loan of goods, services, or real or personal property, for personal, family or household purposes past due or owing for more than 30 days. This definition does not include a loan secured by a mortgage on real property.
To review a copy of the bill text and amendment, click here: http://lims.dccouncil.us/Legislation/B23-0733.
So, what does this all mean? Simply put, if you collect debt, other than commercial debt or loans secured by a real estate mortgage, you should immediately halt outbound communications to Washington DC residents. Your staff should be advised they may receive and respond to inbound communication requests from consumers. This would also be a great time to review your hardship policy requirements with your collectors or if you are a debt buyer, with your collection agency service providers, so you can be as responsive as possible to consumers who request assistance with their payment plans.
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This alert is intended for members of the Receivables Management Association International and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.