NORTH CAROLINA ENACTS CONSUMER ECONOMIC PROTECTION ACT OF 2009
The Governor of North Carolina recently signed into law the Consumer Economic Protection Act of 2009, which regulates debt buyers and collection activities with respect to time-barred debts. The Act expands the scope of the North Carolina Collection Agencies statute (which has a permit requirement) to cover debt buyers. “Debt buyer” is defined as a person or entity that is engaged in the business of purchasing delinquent or charged-off consumer loans or consumer credit accounts or other delinquent consumer debt for collection purposes, whether it collects the debt itself or hires a third party for collection or an attorney-at-law for litigation in order to collect such debt. The Act will:
- Require debt buyers to provide payment receipts;
- Prohibit debt buyers from collecting time-barred debt;
- Prohibit debt buyers from collecting a debt without valid documentation that the debt buyer is the owner and reasonable verification of the amount of the debt;
- Require debt buyers to provide prior written notice to debtors of the intent to file a legal action or commence arbitration;
- Require certain materials demonstrating the obligation to pay to be provided to a court before it may enforce a debtor’s obligation to pay attorneys’ fees for services rendered to an assignee or a debt buyer;
- Require that complaints by collection agencies recite licensing status information and that complaints by debt buyers be accompanied by certain materials demonstrating proof of debt and chain of title;
- Require debt buyers to file evidence establishing the amount and nature of a debt before a court may enter a default judgment or summary judgment against a debtor.
In addition to the above, the Act creates protections for homeowners facing foreclosure. The Act gives the Clerk of Court presiding over a foreclosure hearing the power to ask what efforts have been made to resolve the matter voluntarily before the foreclosure proceeding and to continue the hearing for up to 60 days so that homeowners and lenders can negotiate a solution. The Act also standardizes the amount of bond required to appeal a foreclosure at one percent of the balance due on the loan.
The Act becomes effective on October 1, 2009.
- Michael Tomkies and Charles Gall
DEALING WITH MULTISTATE DEBT COLLECTION COMPLIANCE? We routinely advise on collection-related activities and the regulated activities of creditors, third party debt collectors, debt buyers and loan servicers. We also publish an easy-to-use reference that compiles state and federal laws governing debt collection practices. The Debt Collection Digest is organized topically, includes the federal Fair Debt Collection Practices Act and Commentary for easy cross-reference, and covers ADAD and monitoring and recording statutes. Contact us for details.