As of July 5, 2017, significant changes to West Virginia’s debt collection law are in effect. Senate Bill 536 was passed on April 5, 2017 and approved by West Virginia Governor Jim Justice on April 21, 2017. The Bill includes several changes to West Virginia’s Consumer Credit and Protection Act that will impact debt collectors in West Virginia. This article will address two of the changes.
Statute of Limitations Disclosure
The statute now requires specified disclosures in all written communication with a consumer regarding a debt that is beyond the statute of limitations for filing a legal action for collection.
The statute now reads:
46A-2-128. Unfair or unconscionable means.
No debt collector may use unfair or unconscionable means to collect or attempt to collect any claim. Without limiting the general application of the foregoing, the following conduct is deemed to violate this section:
(f) When the debt is beyond the statute of limitations for filing a legal action for collection, failing to provide the following disclosure informing the consumer in all written communication with such consumer that:
- When collecting on a debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and
- When collecting on debt that is past the date for obsolescence provided for in Section 46 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME) cannot report it to any credit reporting agencies.”
Creditors and Debt Collectors Are Given a “Right to Cure”
Before a consumer may bring an action against a creditor or a debt collector for a violation of the Consumer Credit and Protection Act, the consumer must send a written notice to the creditor or debt collector. The notice must identify the alleged violation and give the creditor or debt collector 45 days to make a cure offer.
If the cure offer is rejected and any final award at a trial is less than the offer, the creditor or debt collector would not be liable for attorney's fees.
Critical provisions of the statute now read:
46A-5-108. Right to cure.
(a) No action may be brought pursuant to this article and articles two, three and four of this chapter until the consumer has informed the creditor or debt collector in writing and by certified mail, return receipt requested, to the creditor’s or debt collector’s registered agent identified by the creditor or debt collector at the office of the West Virginia Secretary of State or, if not registered with the West Virginia Secretary of State, then to the creditor’s or debt collector’s principal place of business, of the alleged violation and the factual basis for the violation and provide the creditor or debt collector forty-five days from receipt by the agent or at the principal place of business referenced above of the notice of violation but twenty days in the case a cause of action has already been filed to make a cure offer, which shall be provided to the consumer’s counsel or, if unrepresented, to the consumer by certified mail, return receipt requested: Provided, That the consumer shall have twenty days from receipt of the cure offer to accept the cure offer or it is deemed refused and withdrawn. When a claim under the provisions set forth in section one hundred one is presented as a counterclaim, cross-claim or third party claim, the notice of right to cure shall be served with the counterclaim, cross claim or third party claim in any manner permitted by the Rules of Civil Procedure.
(f) No cure offer is admissible in any proceeding initiated pursuant to the provisions of this article unless the cure offer is delivered by a creditor or debt collector to the person claiming loss or to any attorney representing such person prior to the filing of the creditor or debt collector’s initial responsive pleading in such proceeding. If the cure offer is timely delivered by the creditor or debt collector, then the creditor or debt collector may introduce the cure offer into evidence at trial. The creditor or debt collector is not liable for the consumer’s attorney’s fees and court costs incurred following delivery of the cure offer unless the actual damages, civil penalties and any other monetary or equitable relief provided for under this article and articles two, three and four of this chapter are found to have been sustained and awarded, without consideration of attorney fees and court costs, to exceed the value of the cure offer.
The entire Bill should be closely reviewed by compliance professionals. West Virginia can be a challenging jurisdiction for the ARM community.
The additional Out-of-Statute requirements should be noted and modifications made to any letters sent on Out-of-Statute accounts to West Virginia consumers.
At first blush, the Right to Cure Provision appears to be a positive for the ARM community. It would seem that a creditor or debt collector would want to respond to any “right to cure” letter to preserve rights outlined in §46A-5-108(f) above. It will be interesting to see how this provision plays out in the coming months.