In a move that could be followed in other states, the North Carolina Department of Insurance yesterday extended an order for an additional 30 days that requires debt collectors to offer deferrals of debt payments to individuals living in The Tarheel State as a means of providing relief from the COVID-19 crisis.
The original order was due to expire on April 26, but will now be extended through May 27. A copy of the extension can be accessed by clicking here.
Along with extending the order, the agency also published guidance in the form of a Frequently Asked Question (FAQ) document.
The order references North Carolina General Statute § 58-2-46, which go into effect upon a state of disaster being declared. Upon the declaration, collection agencies — along with insurance companies, premium finance companies, and other entities subject to the statute — must provide individuals with a 30-day deferral on any premium or debt payments.
Among the questions answered in the guidance is, “Are premium or debt deferrals automatically applied/given?” The answer is no, consumers must request the deferral. If a consumer does not request a deferral, the contract “may be subject to contractual late payments or penalties but may not be cancelled until after the expiration of the Extended Order.” However, if a collection agency contacts an individual, it must advise the individual of the option to defer payment for up to 30 days.
The FAQ also clarifies that the order applies to “all debts,” not just insurance-related debts.
A number of states have been actively issuing regulations, guidance, and emergency orders aimed at restricting what collectors can do during the coronavirus pandemic. Specifically related to the CARES Act payments, California, Oregon, Indiana, Illinois, Washington, Vermont, and Ohio have issued orders prohibiting that money from being seized by garnishment orders.
Wisconsin and Illinois have issued guidance aimed at providing advice to collectors about how they should be operating during the crisis. Massachusetts and Washington, D.C., have enacted emergency regulations that dramatically restrict how individuals can be contacted about their debts. A bill in South Carolina called for a moratorium on medical debt collection. In Ohio, a bill was introduced that would halt all debt collection activities for the duration of the pandemic. The New Jersey legislature is also considering bills aimed at prohibiting certain types of debt collection activities.
A number of states have also come together and worked out a deal with a number of private student loan servicers to offer relief
