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| vol 17, num 2 | August 2019 |
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| Regulation F Looks to Provide Clarity to the FDCPA, but What About Bankruptcy? |
| On May 7, 2019, the Consumer Financial Protection Bureau (CFPB or Bureau) issued its long-awaited Notice of Proposed Rulemaking (NPR) for debt collection. These proposals precede a final rule that will be known as Regulation F and will be the first rules issued under the tenure of Director Kathleen Kraninger. The NPR was published in the Federal Register on May 19, 2019.
When the Fair Debt Collection Practices Act (FDCPA or Act) was enacted in 1977, its intent and purpose was to address abusive debt-collection practices and to ensure that debt collectors who did comply with the law would not be otherwise competitively disadvantaged. Forty-two years later, the FDCPA represents an outdated and ineffective law that provides no clarity for the industry and has done little to protect consumers. This quagmire falls squarely upon Congress’s failure to provide the Federal Trade Commission (FTC), then the primary regulator for the FDCPA, with any rulemaking authority. Thus, the FDCPA has been left to the inconsistent interpretations of the courts.
Fast-forward to 2008 and the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which created the CFPB. Dodd-Frank granted specific authority to the CFPB over certain enumerated consumer-protection laws, including the FDCPA. With this authority, the CFPB was tasked with writing clear rules of the road in order to ensure compliance of industry and to provide consumers with a clear understanding of what constituted appropriate debt-collection activity.
The Bureau started the debt-collection rulemaking process in 2013. The proposals unveiled in the NPR were a culmination of extensive work to understand the nuisances of the debt-collections industry. A topline summary of the proposals are as follows: |
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| Litigation in the Bankruptcy Courts: Federal Practice Regarding Privilege and Expert Discovery |
| Whether it’s a client in financial difficulty or a client pursuing the collection of assets or debts owed, insolvency issues play a prominent role for federal practitioners with commercial and general litigation practices. However, the relatively small size and collegial nature of the bankruptcy bar in many jurisdictions — coupled with the need to move quickly when handling disputes in bankruptcy to preserve value — sometimes lead to relatively informal discovery practices in bankruptcy court. While informal exchanges of information often are sufficient to resolve disputes, practitioners should be mindful of the formal discovery processes
set forth in Rule 26 of the Federal Rules of Civil Procedure (the “Rules”), as made applicable by Rule 7026 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). This article explores the mechanisms available under Rules 26(a)(2) and 26(b)(3)-(5) with respect to privilege and expert discovery in bankruptcy litigation. |
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| Legislative Update on Student Loans and Bankruptcy |
| On May 19, 2019, Senator Dick Durbin introduced Senate Bill 1414, which proposes a simple solution to the ongoing question of how student loans should be handled in bankruptcy. It would strike § 523(a)(8) in its entirety from the Bankruptcy Code, thereby making any governmental or private student loan immediately dischargeable. It is unlikely that this bill will be passed in this Congress, at least not without significant amendments. However, given that Senators Warren, Harris, Klobuchar and Sanders were co-sponsors of the bill, it seems likely that the dischargeability of student loans will be a topic of discussion in the 2020 election and
that reform might be on the way. |
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| The Intersection of Bankruptcy and the FDCPA: The CFPB’s Notice of Proposed Rulemaking |
| On July 30, 2019, the leadership of the Consumer Bankruptcy Committee presented a free webinar titled “The Intersection of Bankruptcy and the FDCPA: The CFPB’s Notice of Proposed Rulemaking.” The expert panel included Committee Co-Chair Jon Lieberman (Sottile & Barile LLC; Loveland, Ohio), Chris Hawkins (The Bradley Firm; Birmingham, Ala.) and Keith Larson (Seiller Waterman LLC; Louisville, Ky.)
The Consumer Financial Protection Bureau’s (CFPB's) efforts to update the Fair Debt Collections Practices Act (FDCPA) are expressed in the CFPB’s Notice of Proposed Rulemaking (NPR), for which the CFPB is seeking public comment. The proposals in the NPR are a clear recognition by the CFPB that modern forms of communication must be incorporated into the debt-collection process and that other updates are necessary.
However, while the NPR touches on the bankruptcy discharge with respect to the transfer of debts, it contains no recognition of — or proposed remedies to — the confusion caused when a debt collector subject to the FDCPA is required to communicate with a consumer that has filed a bankruptcy case.
The webinar discussed three issues on which the leadership of the Consumer Bankruptcy Committee agree that guidance from the CFPB is essential: validation of debts impacted by a bankruptcy filing; the Mini-Miranda Disclosure on communications to consumers in bankruptcy; and communications with consumers represented by counsel in a bankruptcy case.
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| Consumer Bankruptcy Committee Leadership for 2019 |
| The Consumer Bankruptcy Committee is proud to announce our new leaders for 2019!
You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.
The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.
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