Bills Targeting ARM Industry Advance in North Carolina Senate

The North Carolina state Senate Tuesday approved a bill on second reading that would include debt buyers in the definition of “collection agencies,” requiring them to be governed under the same rules. The bill also doubles the maximum fine for violations of state collection law.

The legislation, SB 954 – with a short title of “Protections From Abusive Debt Buyers — passed with a unanimous vote of 48-0 in the Senate on its second reading before the body. A third reading, and a potential final vote, is scheduled for Wednesday.

The bill’s main purpose, according to its sponsor Sen. Martin Nesbitt, D-Buncombe, was to bring debt purchasers under the same rules as collection agencies. The bill also targets collection actions against debtors that have filed for bankruptcy protection and requires debt collectors to disclose to consumers their rights surrounding debts that are beyond North Carolina’s statute of limitations.

In addition to new restrictions on collection activity, the bill would increase the cap on civil liability for violations to $4,000 per violation from $2,000.

If the bill passes its third reading on Wednesday, it would go before the state’s House.

A Senate Committee separately Tuesday approved another bill that, like SB 954, would redefine a debt buyer as a collection agency. The bill would also require debt purchasers to provide 45 days notice to a debtor before filing a lawsuit. The new rules also layout what information must be provided in the notice, such as the name, address, and telephone number of the debt buyer, the name of the original creditor and the debtor’s original account number, a copy of the contract or other document evidencing the consumer debt, and an itemized accounting of all amounts claimed to be owed.