Legislation Introduced in Senate to Exempt Debt Collection Attorneys

Jun 23, 2014
fdcpa1The Fair Debt Collection Practice Technical Clarification Act was introduced to the House of Representatives in July 2013. According to an article by The Hill from August 20, 2013, “This bipartisan legislation simply excludes attorneys from the FDCPA when they are engaged in litigation activities that fall under supervision of the court.”

However, this piece of legislation is not an outright ‘carte blanche’ exemption for attorneys. The Fair Debt Collection Practices Act still applies when attorneys are engaging in traditional collection activities.

The Fair Debt Collection Practice Technical Clarification Act was introduced by Sen. Patrick Toomy (R-Pa.). It is a companion bill to the House proposal (FDCPA), introduced by Rep. Ed Perlmutter (D-Colo.).

This act amends the Fair Debt Collection Practices Act by excluding the definition “debt collector”. According to GovTrack.us, this includes any law firm or licensed attorney: “(1) serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or (2) communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client.”

The purpose of this act is to restore balance. The Fair Debt Collection Practices Act only regulates the debt collection itself, not the practice of the law. Because of this, Congress repealed the attorney exemption to the act. Why? It would seem that it was because of the conduct in the backroom, not necessarily in the courtroom.

In a perfect scenario, the credit system would consist of creditors and consumers who repay what they owe. Once the credit is not repaid, however, it obviously results in higher credit costs. Attorneys then enter the system when people need to collect their money through the court system. The Dodd-Frank Act of 2010 altered the framework of this ecosystem with new rules, supervision, and compliance directives.

According to The Hill, “Legal strategies and advice are no longer sacrosanct.  Meanwhile, courts struggle with the issue of how the federal laws apply to attorney conduct in the courtroom, and the result has been a patchwork of conflicting outcomes.  Again, the ecosystem is in need of correction.”

According to ACA International, the Fair Debt Collection Practice Technical Clarification Act has been referred to the Senate Banking, Housing and Urban Affairs Committee as of May 13, 2014 for review. In addition, ACA International’s Legislative Committee will be reviewing the Senate version of the bill. Updates on its progress will be provided to its members.

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