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Over the past week, several states have either issues new guidance or expanded on the guidance they have previously provided regarding the collection of debts during the COVID-19 pandemic. Check out the summaries below.
On Monday, Wisconsin's Department of Financial Institutions issued a document titled Emergency Guidance on Prohibited Debt Collection Practices. The guidance issues a stern warning that "business as usual" is no longer okay.
The beginning of the document focuses on harassment and states:
Debt collectors aren’t going to be able to talk people into behaving irrationally, no matter how many times they call. To repeatedly “disturb” or “annoy” them anyway is the definition of harassment. Further, during this public health emergency, telephone communications are far too vital to be wasted on futile debt-collection calls—a practice that leads people to ignore calls from unfamiliar numbers, missing some that may be critical.
Debt collectors who routinely rely on telephone calls as a debt-collection tactic should be forewarned: whether conduct “can reasonably be expected to threaten or harass a consumer” depends on the context, and the worldwide context just shifted dramatically. Practices that may have been typical or customary under normal conditions may be deemed harassment under conditions of a global pandemic.
The guidance differentiates between outbound and inbound collection calls, including returned calls to consumers who requested them. "Solicited follow-up communications are different than unsolicited threats to sue, and calls made in a good faith effort to compromise a debt are different than efforts to be the “squeakiest wheel” among a debtor’s creditors."
The guidance also includes an interpretive letter from the Department's Chief Legal Counsel regarding certain servicing acts that are prohibited under the Wisconsin Consumer Act.
The Division of Finacial Institutions of Illinois' regulator, the Department of Financial and Professional Regulation, issued guidance for consumer credit licensees setting an expectation that such licensees will "work proactively with consumers during this crisis" and "be flexible with repayment of debt."
The guidance goes on to list specific bullet points of "best practices" for licensees to follow, including increasing communication with consumers, proactively reach out to consumers to offer payment plans or deferrals, and waive late charges. The guidance lists considering the suspension of debt collection for consumers negatively impacted by COVID-19. The remainder of the bulleted items can be read in the guidance document linked in the previous paragraph.
Concurrently, Illinois' governor issued an executive order that suspends garnishment and wage deductions, except those for child support or spousal maintenance.
The governor of Washington issued a proclamation that states, "allowing garnishments to collect judgments for consumer debt and accrual of post-judgment interest on such judgments...would risk the life, health, and safety of people who are impacted by the economic downturn." The proclamation waives and suspends sections of the Revised Code of Washington relating to garnishments.
Like Massachusetts, Ohio's Attorney General declared CARES Act stimulus checks to be protected against garnishment, attachment, or execution.