July 2, 2021

Maine and Minnesota Enact New State Laws in June

RMAI monitors, tracks, and responds to legislative and regulatory activity in all states and at the federal level. Backed by RMAI’s State Legislative/Regulatory and Federal Legislative/Regulatory Committees, RMAI advocates on how proposals would affect the receivables management industry and often on the unintended consequences of how these proposals actually harm consumers. At the federal level and in multiple states, RMAI retains lobbyists to deliver our message. Our efforts result in successes in many states, and we deliver Member Alerts like this one to keep you informed.

A handful of laws were signed into law by governors in the second half of June. Here are some of the most relevant to RMAI members:

Maine HB 542 (Public Law 382) – The law makes adjustments to the value of property that is exempt from attachment and executions, including the homestead exemption; installment payment calculation related to judgments; personal property exemptions; and an inflation-indexed bank account exemption. This law takes effect on October 17, 2021.

Background & Analysis: This law is similar to a number of bills that have been introduced across the nation. We have seen bills with similar types of provisions pass into law in California, Colorado, Maryland, and Washington in recent years. Generally, the dollar threshold of exemptions is consistent with other states. What stands out in this bill is the $3,000 bank account exemption which is tied to an inflation index which is on the higher side compared to recent enactments.

Maine HB 1082 (Public Law 245) – The law contains several new requirements for debt collectors, including: (1) authorizing debt collectors to be licensed through the National Multistate Licensing System (NMLS); (2) new administrative procedures for the Bureau of Consumer Credit Protection relating to the issuing and revoking of collection licenses; (3) allowing debt collectors who have affiliates to have a single license and a single examination; (4) prohibiting debt collectors from collecting medical expenses from a consumer who has been determined to be qualified for free or charity care; and (5) prohibiting debt collectors from bringing suit in small claims courts. This law takes effect on October 17, 2021.

Background & Analysis: The bill was originally focused on debt buyers and contained more onerous documentation requirements. After extensive negotiations in 2020, RMAI was successful in removing most of the debt buying provisions from the bill with the remaining provisions applying universally to the collection industry and not singling out debt buyers. Additionally, RMAI was able to insert language which allows debt collectors who have affiliates to have a single license and a single examination, a provision which RMAI has successfully advocated for in California and Minnesota as well. Maine continues to be a challenging state for debt collectors and these new statutory changes will not alter that environment. RMAI has seen a number of bills across the nation that have sought to ban the use of small claims courts for debt collection actions and is a trend that RMAI members are advised to monitor.

Minnesota HB 6a (Chapter # 4 of the First Special Session of 2021) – The law (appearing on pages 54-64) expands the definition of “collection agency” to include “debt buyers” which will thereby require debt buyers to be licensed as a collection agency under the existing Collection Agency Act. Debt buyer is defined as a “business engaged in the purchase of any charged-off account, bill, or other indebtedness for collection purposes, whether the business collects the account, bill, or other indebtedness, hires a third party for collection, or hires an attorney for litigation related to the collection.” Debt buyers are statutorily exempted from six provisions in the Collection Agency Act related to a third-party collection agency’s interaction with clients, including the maintaining of trust accounts. Debt buyers are required to be licensed as of January 1, 2022; however, any debt buyer whose application is filed prior to January 1, 2022 and is pending a decision, may continue to operate without a license until the commissioner approves or denies the application. A new provision is added to the Collection Agency Act which allows affiliated companies to operate under a single license and be subject to a single examination, provided that all the affiliated company names are listed on the license.

Background & Analysis: This law adopts the fairly common practice of licensing debt buyers under a state’s Collection Agency Act. RMAI was successful in negotiating into the legislation the six statutory exemptions for debt buyers that related to client relationships; permitting affiliated companies to share a license; and allowing debt buyers to continue operations while their application is pending approval. However, it is important for debt buyers to note that the Minnesota Collection Agency Act requires branch offices be licensed (in addition to the company itself) as well as each employee be “registered” with the state. RMAI has been informed by the Department of Commerce, that some larger collection agencies have opted to manage their accounts through a “Minnesota Unit” and will register only a select group of collectors to handle the accounts of that unit as a way to deal with the branch and employee registration requirements.