In 2009, the North Carolina legislature passed Senate Bill (SB) 974, which governed the requirements surrounding debt collection and asset buying in the state. At the time (and still), many in the industry viewed this bill as highly restrictive. For instance, the law broadened the definition of collection agencies and debt collectors, increased civil penalties (minimum of $500, max of $4000 per violation), and restricted the ability of collectors and debt buyers to file suit against a consumer. While some of this is in accord with industry standards, there was no doubt that 2009 signaled a change in the way collection agencies operated within North Carolina.
All of that is about to change, pending the outcome of another Senate Bill (SB 511), which was first filed in March 2015, and has since passed through some Senate committees. As with most bills, there is opposition and support from different groups. Some consumer protection groups in North Carolina argue that the bill makes it too easy for a debt buyer to file suit against a consumer, but there is still a significant amount of documentation required in the proposed legislation. For example, the following are still requirements to bring a lawsuit:
The original account number, original creditor, the total amount claimed, an itemization of post charge‑off payments or credits (where applicable), the charge‑off balance (or an explanation of how the balance was calculated), an itemization of post charge-off fees if applicable, the date of last payment, and the amount of post charge-off interest claimed (and why).
As you can see, SB 511 does not give carte blanche authority for suits to be filed. There will still be restrictions on time-barred lawsuits (standard to the accounts receivable industry). One important change from the previous law, however, is that debt collectors can continue to contact a debtor even if they can no longer file suit due to statutes of limitations. According to the 2009 law, a debt buyer (or collection agency on behalf of a debt buyer) could not even send letters or phone calls in pursuit of a debt if it was time-barred.
SB 511 thankfully addresses this issue in a more favorable light. Basically, the following statement must be included if the debt is not past the date of obsolescence (text taken directly from SB 511):
- "The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt buyer] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting."
If the debt IS past the date of obsolescence, the following must be included in written communication with the debtor:
- "The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency."
It remains to be seen whether SB 511 gets passed. Before it becomes law, it must pass the full Senate, the House, and potentially be signed by the governor. We’ll be sure to keep you updated!