DC residents won a major legislative victory today, thanks to the Council having passed the “Protecting Consumers from Unjust Debt Collection Practices Emergency Amendment Act” (the Act). Introduced by Chairman Phil Mendelson in partnership with DC Attorney General Karl Racine, the Act marks the first major revision of the debt collection laws first passed in 1971 and will meaningfully expand consumer protections as the COVID-19 public health emergency measures expire.
Crucially, these protections advance racial equity—DC residents of color face debt collection at five times the rate experienced by white DC residents. Debt in America: An Interactive Map, Urban Inst. (last updated March 31, 2021). And the timing of the Act is important: as Tzedek DC and allies have been urging during the public health emergency, such legislation is necessary as debt collectors prepare to file a tsunami of claims following the end of the public health emergency moratorium on debt collection suits.
Here, we highlight some of the Act’s reforms. The Act:
Expands the scope of the protections
Defines protections for “consumer debt” broadly to cover all personal, family, medical, or household debts, which is important because the outdated statute provided protections mostly limited to installment loans, a very narrow category of debts
Strengthens anti-harassment measures
Prohibits creditors and debt collectors from making false threats and false reports
Stops creditors and debt collectors from calling at unreasonable hours or with unreasonable frequency
Contains enforcement mechanisms and penalties for violations
Limits punitive actions that can be taken against DC residents facing debt collection suits
Caps (at 15%) the attorneys’ fees that a plaintiff can seek in a debt collection lawsuit
Protects DC residents from being imprisoned for failure to pay or appear in debt collection cases and raises the threshold for the issuance of bench warrants, an issue that has become increasingly important as certain debt collection lawyers have used the coercive tactic of obtaining arrest warrants in debt collection cases
Addresses the underlying causes of default judgments
In an important step for fairness, includes robust evidentiary requirements that must be met for a debt collector to file a case, win a judgment, or collect on a debt (This is especially significant for unrepresented defendants, as it means that the burden is on the debt collector, not the individual without a lawyer, when it comes to the issue of whether the complaint is properly substantiated.)
Requires verification of defendant’s current address immediately prior to commencing an action
Tightens the statute of limitations
Specifies a three-year statute of limitations on debt, regardless of whether the debt is labeled “under seal”
Prevents plaintiffs from suing where the statute of limitations has lapsed
Stops “zombie debts” from coming back to life through payments or affirmations made after the expiration of the statute of limitations
The Act is currently being reviewed by Mayor Bowser and, when signed, will take effect immediately to help ensure that DC residents are protected from abusive debt collection practices until a permanent statute passes through the full legislative process.
Community members or others with questions about the new protections can contact Tzedek DC at ms@tzedekdc.org or (202) 274-7386.