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Maine Amends Debt Collection Statute, Bills Pending in Other States

Maine-state-logoMaine has amended its statute regulating debt collection while bills regarding debt collection are pending in other states.  Here’s a breakdown of Maine’s amendments:

Written or Court Entered Settlement and Payment Agreements

Settlement agreements must be in a writing or entered in “open court” or “approved by the court and included in a court order.” For settlement agreements that are not made in open court or in a court order, the debt collector must “provide” a copy of the written settlement agreement to the debtor within 10 days of the agreement being made. A debtor is not required to make payment until the written agreement is “provided.”

Protects Existing Statutes of Limitations – No Revival

Unless Maine law provides a shorter limitations period, the limitations period on all debt subject to the Maine Act is now set at six years. Once the limitations period has expired, a payment cannot restart the limitations period. Earlier versions of the bill would have reduced the limitations period to three years in the case of debt buyers.

Ban on Collecting Out-of-Statute Debt

The amendment prohibits collection of a debt subject to an expired limitations period, but only if “the debt collector knows or reasonably should know that the collection action is barred by the limitations period.” The amendment should offer relief to those who mistakenly attempt to collect on such debt.

Effective “Sometime” in October

The amendments to the Maine Fair Debt Collection Practices Act take effect 90 days after the close of Maine’s legislative session. There’s no precise date for when the current session will retire, but Maine’s Legislative Services has calendared events through July 16 (although it notes “[d]ates and times are subject to change”). That would make the amendments effective October 14. But if the Legislative Session goes beyond July 16, the effective date would also move to a later change. You can keep up with the Pine Tree State’s legislative session here.

DBA International at Work

The original bill contained pages of amendments that would have imposed onerous, and in some instances ridiculous, requirements on debt collectors. In one draft, proponents of the bill sought to prevent any payment made after default from restarting the limitations period, even if the payment was made before the limitations period had expired. Other proposals would have prohibited collection of a debt unless 11 months’ of the most recent account statements were in hand.

DBA International, the trade organization of debt buying companies, was on the ground in Maine over much of the legislative session, meeting with legislators, regulators and other participants in the credit and collections industry, as well as consumer groups in its successful effort to prevent passage of a bill that would have harmed both the industry and consumers.

A full text of the amendment is available here.

Other State Legislation Pending

DBA International worked closely with the industry and regulators over proposed amendments to Indiana’s statute regulating debt collection. The bill did not make it beyond a committee vote. A Rhode Island bill was fast-tracked, providing one-day’s notice prior to its introduction to that state’s banking committee. DBA was able to have its representative in Providence the next day and the bill did not make it to a vote in the committee. DBA continues to monitor activity in both Rhode Island and Indiana.

Other states still have active bills, but it remains difficult to say whether any will become law. DBA remains active in each of these states, meeting with legislators, regulators and other interested parties. DBA members receive updates on pending state legislation through their participation in state legislative committees and DBA publications. These efforts are largely funded by DBA’s members and others through their generous donations to the DBA Legislative Fund.

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as outside counsel to RMA International, on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law. From 2014 to 2017, he chaired the ABA's Bankruptcy and Debt Collection Subcommittee.

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