CFPB Adopts Strict Liability Standard for Debt Collectors Who Sue or Threaten Suit Over Time-Barred Debt

April 30, 2021
The Temple 10-Q

Types : Bylined Articles

On January 19, 2021, the Consumer Financial Protection Bureau (CFPB) published its final debt collection rules in the Federal Register, including 12 C.F.R. § 1006.26(b), which prohibits collections of time-barred debt.

Under the new rules, collectors who sue or threaten to sue consumers for time-barred or “zombie” debts ‒ debts for which the statute of limitations already expired ‒ violate the Fair Debt Collection Practices Act (FDCPA). The new rule, however, does not prohibit the filing of proofs of claim in a bankruptcy proceeding for otherwise time-barred claims. The final rule is scheduled to take effect on November 30, 2021, though on April 7, 2021, the CFPB proposed delaying the effective date until January 29, 2022.

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