A proposed law has been introduced in Congress that would make it more likely debtors in collections will be sued. The bill is HR 4550 and would protect attorneys from the Fair Debt Collection Practices Act which regulates unfair, deceptive, illegal, and bad behavior by collectors.
The proposed legislation states: “To amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who engage in activities related to legal proceedings from the definition of a debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes.”
If passed the end result will be more lawyers will most likely engage in collection and rush to sue to protect them from liability under the Fair Debt Collection Practices Act.
According to law professors in Texas, “The proposed bill is likely to lead to:
➤ More lawsuits as attorneys rush to litigation to immunize their conduct in an already overburdened court-system.
➤ Less informal resolution of consumer debt as lawsuits become preferred method of collection.
➤ More use of unfair litigation tactics, all now covered by the FDCPA, including:
1. Lawsuits against consumers in distant courts.
2. Lawsuits to collect zombie debt.
3. Lawsuits to collect amounts not owed.
➤ More judgments obtained through unfair means with long-lasting and devastating consequences to consumers.”
This is in fact a dangerous development for consumers. Thankfully, the bill has been withdrawn at least as of now.
“For now” is the critical phrase. Let’s hope this doesn’t get stuck in something else.