ACA proposes changes to debt collection law

Consumers could be required to notify collectors about bankruptcy

Consumers should bear the responsibility for notifying creditors that they have filed for bankruptcy, according to a proposal by a major debt collection trade group.

Responding to a Feb. 26 report by the Federal Trade Commission on debt collection reforms, the Association of Credit and Collection Professionals (ACA International) recommended amending the bankruptcy laws to require consumers filing for bankruptcy to notify their collectors about their status. Currently, the responsibility for notification lies with the bankruptcy courts. According to ACA, this would help reduce the number of consumer complaints the FTC handles about debt collectors who continue to contact consumers about outstanding debt after they have filed for bankruptcy, which is against the law.

"Both the FDCPA and the bankruptcy code prohibit communication with consumers once they have filed for bankruptcy. However, often collectors do not receive notice of this bankruptcy filing. That is the reason ACA is proposing to amend the bankruptcy code to require consumers, at the time bankruptcy is filed, to provide notice to debt collectors known by the consumer to be collecting a debt," according to ACA.

"This amendment to the bankruptcy code would be a very simple solution to what is obviously a widespread problem for consumers and debt collectors," said Rozanne Andersen, ACA executive vice president and general counsel. "ACA has met with numerous Congressional offices to seek this fix and continues to seek champions on this critical issue."

See related: FTC urges changes to the Fair Debt Collection Practices Act, Debt collectors' ethics code

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Updated: 03-26-2019