- State Updates: New York, Texas, Minnesota, Nevada
- Consumer Financial Protection Bureau
- RMAI COVID-19 Resources
State Updates: Debt Collection Suspension Status and Regulatory Guidance
Suspension of State Debt Collection Renewed
New York State: On May 15, 2020, recognizing many New Yorkers are still suffering physically and economically from the impact of the COVID-19 pandemic, New York State’s Attorney General renewed an order first made in March and renewed in April halting the collection of medical and student debt owed to the State of New York. The renewed order extends the suspension of payments, accrual of interest and the collection of fees for an additional 30-day period ending June 16, 2020.
So, what does this mean? The order obviously impacts the office of the attorney general in terms of its ability to collect the medical and student loan debt owed to the state. But note, the order permits consumers who owe the state of New York non-medical or non-student debt the ability to apply for similar protection. If granted, the collection of non-medical or non-student loan debt owed to the state would also be prohibited during the term of the order or until June 16, 2020. Members who collect non-medical debt or non-student loan debt owed to the state of New York should be aware some consumers may have obtained temporary protection from the collection of this category of debt and should adjust their communications with these consumers accordingly.
Consumer Cease and Desist Letter Instructions and Template
New York City: On May 20, the New York City Department of Consumer Affairs (DCA) issued an advisory to debt collection agencies reminding them of the state’s prohibition against garnishing economic stimulus payments or communicating with an individual beyond what is legally allowed. Click here to review the New York Attorney General’s April 18, guidance making stimulus payments distributed to New Yorkers under the CARES Act exempt from garnishment.
The apparent purpose of the DCA’s May 20th advisory was to remind debt collection agencies it is a violation of the law to garnish economic stimulus payments or communicate with an individual beyond what is legally allowed and to warn debt collection agencies the DCA will enforce compliance with the law.
So, what does this mean? The DCA is prepared to act against any agency it finds to be violating the state or federal COVID-19 orders regarding stimulus payments and the collection of debt during the state of emergency. It has armed New Yorkers with a sample cease and desist letter template and encourages them to report agencies they believe are in violation of the law. The instructions and cease and desist template may be reviewed here. The instructions advise:
If they continue to contact you, please file a complaint (include a copy of the letter you sent) with the Department of Consumer Affairs (DCA) by calling 311 or visiting nyc.gov/consumers.
Garnishment and Turnover Orders May Resume
On May 14, 2020, the Supreme Court of Texas issued an order clarifying that certain issuances, writs of garnishment and turnover orders may resume. The order was necessary because of the Court’s earlier prohibition of such actions during the COVID-19 State of Disaster. The Court’s May 14, 2020, Order takes effect upon the expiration of the state’s declaration of the state of disaster (14th Emergency Order Regarding the COVID-19 State of Disaster) and expires on August 12, 2020, unless extended by the Chief Justice of the Supreme Court.
In addition to the Court’s decision to allow garnishment and turnover actions to resume, the Court makes clear receivers and judgment creditors must now send an additional notice to the judgment debtor in the same manner prescribed by Rule 663a of the Texas Rules of Civil Procedure, that shall read as follows:
“IF YOU RECEIVED A STIMULUS PAYMENT FROM THE IRS UNDER THE CARES ACT, THE AMOUNT YOU RECEIVED MAY BE SUBJECT TO A COURT STAY PROTECTING THOSE FUNDS DURING THE CURRENT EMERGENCY. YOU HAVE A RIGHT TO REQUEST A HEARING WITH THE COURT, AND THE COURT WILL CONSIDER YOUR REQUEST ON AN EXPEDITED BASIS.”
So, what does this mean? Notwithstanding the state Supreme Court’s decision to lift the prohibition against garnishment and turnover actions, members who collect in the state of Texas should proceed with caution. The Order continues to protect the seizure of stimulus payments made to residents of Texas. It also affords a judgment debtor or receiver the right to a request a hearing (either in person or remotely, as local circumstances permit), within two business days of the court’s receipt of the request, to determine what funds are attributable to a stimulus payment received pursuant to Section 2201 of the CARES Act.
Members should also be aware, courts and turnover receivers appointed under Texas Civil Practice & Remedies Code Section 31.002 are obligated to release or refund any stimulus payments affected by garnishment or turnover. To review the order, click here.
Regulatory Guidance for Debt Collection Agencies and Debt Collectors
On May 15, 2020, the Minnesota Department of Commerce issued guidance to address concerns of licensed debt collection agencies and their employees about the state’s previously issued COVID-19 Stay at Home Order. Under the Minnesota Stay at Home Order, certain businesses were established as critical and others were established as exempt. It was determined debt collection and workers supporting debt collection were not exempt from the Order, and therefore any work that could be done by these individuals was required to be done from home. This interpretation created a conundrum for debt collection licensees because of the state’s licensure requirement for all branch offices of a collection agency.
To alleviate the issue surrounding branch office licensing and to ensure individual collectors were in fact working from home temporarily to protect themselves and others, the Minnesota Department of Commerce issued an order making clear the home location of an individual debt collector need not be licensed as a branch office. This decision will continue through 30 calendar days after the expiration of any peacetime emergency or August 30, 2020, whichever is later.
So, what does this mean? Collectors who work from home in Minnesota may do so on a temporary basis and without obligation to become licensed by the state, so long as they satisfy the following conditions:
- The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
- The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason;
- None of the activity will be conducted in person with members of the public from the home location; and
- The licensee shall at all times exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.
The May 15, 2020 guidance from the Minnesota Department of Commerce only pertains to allowing collectors to work from home and the Department’s decision to temporarily suspend its enforcement of Minn. Stat. § 332.33, subd. 3. All other legal requirements under Chapter 332, and other applicable law are still in force. A licensee will still be responsible for any other violations of law from the activity performed at the home office if there are violations. To review the department’s guidance document, click here.
Restrictions on Debt Collections Extended
This week the Nevada Financial Institutions Division issued a one sentence advisory informing interested persons the state’s moratorium on collections had not been lifted and the Governor’s prior restrictions on debt collection extended to May 30, 2020.
Consumer Financial Protection Bureau
On May 15, 2020, the CFPB announced it had extended the comment period for its proposed new rule regarding out of statute debt through August 4, 2020. The notice announcing the extension of the comment period is available here.
RMAI is in the final stages of preparing its Comments. RMAI’s Comments are thorough and thoughtful and reflect the members’ responses we received from the survey conducted earlier this year.
RMAI COVID-19 Resources
Visit the RMAI COVID-19 resource page on the RMAI website to access other legislative and regulatory guidance and relevant information, RMAI Member Alerts, COVID-19 webinars, and more. The latest COVID-19 webinar delivers timely insight for Returning to the Workplace in a COVID-19 Environment.
RMAI’s Commitment to Consumers and FAQs. The communication is posted in the Resources for Businesses, Employers and Consumers section of the COVID-19 resource page as well as on the Consumers page of the RMAI website.