April 2, 2020: On March 27, 2020, North Carolina issued an Order directing all collection agencies to comply with North Carolina General Statute 58-2-46. This is North Carolina’s State of Disaster statute and applies to a number of covered entities including collection agencies. The Order makes clear it applies to collection agencies licensed by the North Carolina Department of Insurance and is in effect until 60 days from March 27, 2020, which is May 26, 2020.
A copy of the relevant sections of the Statute are available here.
This Order means that all collection agencies must give their North Carolina consumers the option of deferring debt payments that are due during the earlier of:
- The time period covered by the proclamation or declaration; or
- The time period prior to the expiration of the Commissioner’s order declaring subdivisions (1) through (4) of this section effective for the specific disaster, as determined by the Commissioner.
The deferral period is 30 days from the due date of the payment.
New Information from the North Carolina Department of Insurance:
Following issuance of the Order, the North Carolina Department of Insurance released a Frequently Asked Questions (FAQ) document associated with the Commissioner’s Order and Bulletin 20-B-06 issued on March 27, 2020. A copy of the FAQ document is available here.
The FAQ provides additional information about debt collection activity during this period.
So, what does this all mean? As stated in the original Member Update, members are not required to take affirmative steps to reach out to their consumers to offer the deferral option. The FAQ makes clear; consumers are responsible for taking the necessary steps to contact the collection agency to discuss their options regarding:
- Debt payments in default prior to the date of the Order;
- Debt payments that are due on or after the date of the Order; and
- Voluntary, non-contractual debt repayments which a consumer has set up via an ACH or credit card payment arrangement that come due during the period in which the Order is in effect.
If the consumer requests their payments to be deferred, then all attempts to collect the debt and collection activities must cease. The deferral covers transmission of notices of action, any payments which are currently in collection, including those where a payment schedule has been set-up, and time limits imposed by statute.
Consumer to Agency Communication: To be clear, when a consumer requests a deferral, not just payments are deferred; ANY collection activity should cease for 30 days. This is true for single and recurring payment arrangements. For example, if a consumer requests a 30-day deferral or suspension on a recurring ACH or credit card payment arrangement he or she already has in place with the agency, then the agency should cease all collection activity for the consumer.
Agency to Consumer Communication: If the collection agency contacts the consumer to discuss repayment, the agency must advise the consumer of the option to defer the payment for 30 days. Before the collection agency is required to apply the deferral, the consumer must state their desire to exercise the option to defer or delay their debt payments to the company. Members are advised to record the consumer’s option to defer or delay their debt payments either in a voice recording or at a minimum in the notes section of the application.
In all cases, after the customer has been advised of their option to defer or delay their debt payments and accepts it, no additional fees may be imposed should they choose this option and no late fees or additional fees should be applied to an account.
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.