A bill has been reintroduced in the House of Representatives that would prohibit lawsuits filed to collect debts for which the statute of limitations has expired, while also placing additional conditions on time-barred debts that are sold. The Fair Debt Collection Improvement Act, H.R. 2704, was introduced again by Rep. Steve Cohen [D-Tenn.].
The bill seeks to amend the Fair Debt Collection Practices Act. It was introduced last week, but a text of the bill has not yet been published, so the exact details of how it would go about doing what it aims to do are not clear.
It should be noted lawsuits can be filed against consumers seeking to collect on debts for which the statute of limitations is expired — it is up to the consumer to assert that the statute of limitations has expired as an affirmative defense to have the collection suit dismissed.
“Consumers must be protected from overzealous debt collectors who are bending the rules to collect,” Rep. Cohen said in a statement. “When the original creditor sells a time-barred debt to new collectors, consumers should be informed of the rules and not be misled. My legislation helps consumers recognize and understand the rules of debt collection and avoid being victimized.”
Organizations that purchase time-barred debts would be required to inform the consumer that:
- the new debt collector now holds the debt, not the original creditor
- because the debt falls outside the statute of limitations, the debt collector may not sue to collect the debt
- if applicable under state law, any payment towards the debt may revive the entire debt
It should also be noted that many collection operations already are taking these steps when attempting to collect on time-barred debts.
Rep. Cohen previously introduced this bill back in 2021. That initiative had several cosponsors attached to it. This current version has no other cosponsors.
