Small Business and Consumer Debt Collection Emergency Relief Act of 2020

II 116TH CONGRESS 2D SESSION S. 3565 To amend the Fair Debt Collection Practices Act to provide additional protec- tions for consumers and small business owners from debt collection during a major disaster or emergency. IN THE SENATE OF THE UNITED STATES MARCH 22, 2020 Mr. BROWN introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Fair Debt Collection Practices Act to provide additional protections for consumers and small business owners from debt collection during a major disaster or emergency. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Small Business and 4 Consumer Debt Collection Emergency Relief Act of 5 2020’’. 6 SEC. 2. FINDINGS. 7 Congress finds that— 8 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 2 •S 3565 IS (1) the collection of debts involves the use of 1 the mails and wires and other instrumentalities of 2 interstate commerce; 3 (2) at times of major disaster or emergency, the 4 income of consumers and small businesses is often 5 impaired and their necessary daily expenses often in- 6 crease; 7 (3) temporary forbearance on debt collection is 8 critical to fostering economic recovery and stability 9 in the wake of major disasters or emergencies; 10 (4) temporary forbearance benefits not only 11 consumer and small business debtors, but also other 12 creditors by avoiding downward collateral price spi- 13 rals triggered by an increase in foreclosure activity; 14 (5) without forbearance, many consumers and 15 small businesses are unlikely to be able to pay their 16 obligations according to their original terms and are 17 likely to default on obligations or file for bank- 18 ruptcy, resulting in reduced recoveries for creditors, 19 and in the case of bankruptcy, no recovery of 20 unaccrued interest; 21 (6) with forbearance, creditors are likely to re- 22 alize greater long-term value because consumers and 23 small businesses will be more likely to be able to 24 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 3 •S 3565 IS repay their obligations after the major disaster or 1 emergency has subsided; 2 (7) the legislative and administrative response 3 to major disasters and emergencies may consist of 4 multiple components divided among different stat- 5 utes and programs; and 6 (8) when evaluating whether property has been 7 taken from a person without just compensation, a 8 holistic evaluation of the burdens and benefits of all 9 legislative and administrative responses, including 10 indirect benefits from macroeconomic stabilization, 11 is appropriate. 12 SEC. 3. RESTRICTIONS ON COLLECTIONS OF DEBT DURING 13 A NATIONAL DISASTER OR EMERGENCY. 14 (a) IN GENERAL.—The Fair Debt Collection Prac- 15 tices Act (15 U.S.C. 1692 et seq.) is amended by inserting 16 after section 812 (15 U.S.C. 1692j) the following: 17 ‘‘§ 812A. Restrictions on collections of debt during na- 18 tional disaster or emergency 19 ‘‘(a) DEFINITIONS.—In this section: 20 ‘‘(1) The term ‘consumer’ means any individual 21 obligated or allegedly obligated to pay any debt; 22 ‘‘(2) The term ‘covered period’— 23 ‘‘(A) means— 24 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 4 •S 3565 IS ‘‘(i) the period beginning on the date 1 that is 1 day after the date on which a 2 major disaster is declared by the President 3 under section 401 of the Robert T. Staf- 4 ford Disaster Relief and Emergency Assist- 5 ance Act (42 U.S.C. 5170), where assist- 6 ance is authorized under section 408 of 7 that Act (42 U.S.C. 5174), and ending 8 120 days after the end of the incident pe- 9 riod for that disaster; or 10 ‘‘(ii) the period beginning on the date 11 that is 1 day after the date on which an 12 emergency involving Federal primary re- 13 sponsibility is determined to exist by the 14 President under section 501(b) of the Rob- 15 ert T. Stafford Disaster Relief and Emer- 16 gency Assistance Act (42 U.S.C. 5191(b)) 17 that simultaneously covers all States for a 18 single incident, event, or emergency, and 19 ending 120 days after the end of the inci- 20 dent period for that emergency; and 21 ‘‘(B) includes the period beginning on the 22 date that is 1 day after the date of enactment 23 of this Act and ending on the date that is 120 24 days after the end of the incident period with 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 5 •S 3565 IS respect to the emergency involving Federal pri- 1 mary responsibility determined to exist by the 2 President under the section 501(b) of the Rob- 3 ert T. Stafford Disaster Relief and Emergency 4 Assistance Act (42 U.S.C. 5191(b)) with re- 5 spect to the coronavirus disease 2019 (COVID– 6 19). 7 ‘‘(3) The term ‘creditor’ means— 8 ‘‘(A) any person who offers or extends 9 credit creating a debt or to whom a debt is 10 owed or other obligation for payment; 11 ‘‘(B) any lessor of real or personal prop- 12 erty; or 13 ‘‘(C) any provider of utility services. 14 ‘‘(4) The term ‘debt’— 15 ‘‘(A) means any obligation or alleged obli- 16 gation that is or during the covered period be- 17 comes past due— 18 ‘‘(i) for which the original agreement, 19 of if there is no agreement, the original ob- 20 ligation to pay was created before the cov- 21 ered period, whether or not such obligation 22 has been reduced to judgment; and 23 ‘‘(ii) that arises out of a transaction— 24 ‘‘(I) with a consumer; or 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 6 •S 3565 IS ‘‘(II) with a small business; and 1 ‘‘(B) does not include a federally related 2 mortgage loan. 3 ‘‘(5) The term ‘debt collector’ means a creditor, 4 and any person or entity that engages in the collec- 5 tion of debt, including the Federal Government and 6 a State government, irrespective of whether the debt 7 is allegedly owed to or assigned to that person or to 8 the entity. 9 ‘‘(6) The term ‘federally related mortgage loan’ 10 has the meaning given the term in section 3 of the 11 Real Estate Settlement Procedures Act of 1974 (12 12 U.S.C. 2602). 13 ‘‘(7) The term ‘major disaster or emergency’ 14 means— 15 ‘‘(A) a major disaster declared by the 16 President under section 401 of the Robert T. 17 Stafford Disaster Relief and Emergency Assist- 18 ance Act (42 U.S.C. 5170), where assistance is 19 authorized under section 408 of such Act (42 20 U.S.C. 5174); or 21 ‘‘(B) an emergency involving Federal pri- 22 mary responsibility that is determined to exist 23 by the President under section 501(b) of the 24 Robert T. Stafford Disaster Relief and Emer- 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 7 •S 3565 IS gency Assistance Act (42 U.S.C. 5191(b)) that 1 simultaneously covers all States for a single in- 2 cident, event, or emergency. 3 ‘‘(8) The term ‘small business’ has the meaning 4 given the term ‘small business concern’ in section 3 5 of the Small Business Act (15 U.S.C. 632). 6 ‘‘(b) PROHIBITIONS.— 7 ‘‘(1) IN GENERAL.—Notwithstanding any other 8 provision of law, no debt collector may during a cov- 9 ered period, relating to a debt owed by a consumer 10 or small business— 11 ‘‘(A) capitalize unpaid interest; 12 ‘‘(B) apply a higher interest rate triggered 13 by the nonpayment of the debt to the debt bal- 14 ance; 15 ‘‘(C) charge a fee triggered by the non- 16 payment of the debt; 17 ‘‘(D) sue or threaten to sue for non- 18 payment of a debt; 19 ‘‘(E) continue litigation to collect a debt 20 that was initiated before the date of enactment 21 of this section; 22 ‘‘(F) submit or cause to be submitted a 23 confession of judgment to any court; 24 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 8 •S 3565 IS ‘‘(G) enforce a security interest through 1 repossession, limitation of use, or foreclosure; 2 ‘‘(H) take or threaten to take any action 3 to enforce collection, or any adverse action for 4 nonpayment of a debt, or for nonappearance at 5 any hearing relating to a debt; 6 ‘‘(I) commence or continue any action to 7 cause or to seek to cause the collection of a 8 debt, including pursuant to a court order issued 9 before the covered period, from wages, Federal 10 benefits, or other amounts due to a consumer 11 or small business, by way of garnishment, de- 12 duction, offset, or other seizure; 13 ‘‘(J) cause or seek to cause the collection 14 of a debt, including pursuant to a court order 15 issued before the covered period, by levying on 16 funds from a bank account or seizing any other 17 assets of a consumer or a small business; 18 ‘‘(K) commence or continue an action to 19 evict a consumer or small business from real or 20 personal property; or 21 ‘‘(L) disconnect or terminate service from 22 utility service, including electricity, natural gas, 23 telecommunications or broadband, water, or 24 sewer. 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 9 •S 3565 IS ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 1 this section may be construed to prohibit a consumer 2 or small business from voluntarily paying, in whole 3 or in part, a debt. 4 ‘‘(c) REPAYMENT PERIOD.—After the expiration of 5 a covered period, a debt collector shall— 6 ‘‘(1) not add to the past due balance any inter- 7 est or fee prohibited by subsection (b); 8 ‘‘(2) for any debt with a defined payment pe- 9 riod, extend the time period to repay the past-due 10 balance of the debt by 1 payment period for each 11 payment that a consumer or small business missed 12 during the covered period, with the payments due in 13 the same amounts and at the same intervals as the 14 pre-existing payment schedule; 15 ‘‘(3) for an open end credit plan, as defined in 16 section 103 of the Truth in Lending Act (15 U.S.C. 17 1602), or other credit plan without a defined term, 18 allow the consumer or small business to repay the 19 past-due balance in a manner that does not exceed 20 the amounts permitted by the methods described in 21 section 171(c) of the Truth in Lending Act (15 22 U.S.C. 1666i–1(c)) and regulations promulgated 23 under that section; or 24 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 10 •S 3565 IS ‘‘(4) shall, if the debt has no payment periods, 1 allow the consumer or small business a reasonable 2 time in which to repay the debt in affordable pay- 3 ments. 4 ‘‘(d) COMMUNICATIONS IN CONNECTION WITH THE 5 COLLECTION OF A DEBT.— 6 ‘‘(1) IN GENERAL.—Without prior consent of 7 the consumer or small business given directly to the 8 debt collector during a covered period, or the express 9 permission of a court of competent jurisdiction, a 10 debt collector shall only communicate in writing in 11 connection with the collection of any debt. 12 ‘‘(2) REQUIRED DISCLOSURES.— 13 ‘‘(A) IN GENERAL.—All written commu- 14 nications under paragraph (1) shall inform the 15 consumer or small business that the commu- 16 nication is for informational purposes and is 17 not an attempt to collect a debt. 18 ‘‘(B) REQUIREMENTS.—The disclosure re- 19 quired under subparagraph (A) shall be made— 20 ‘‘(i) in type or lettering not smaller 21 than 14-point bold type; 22 ‘‘(ii) separate from any other disclo- 23 sure; and 24 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 11 •S 3565 IS ‘‘(iii) in a manner designed to ensure 1 that the recipient sees the disclosure clear- 2 ly. 3 ‘‘(e) VIOLATION.—Any person who violates this sec- 4 tion shall— 5 ‘‘(1) except as provided in paragraph (2), be 6 subject to civil liability in accordance with section 7 813 as if the person is a debt collector for purposes 8 of that section; and 9 ‘‘(2) be liable in an amount not greater than 10 10 times the amounts described in section 813. 11 ‘‘(f) TOLLING.—Except as provided in section (g)(5), 12 any applicable time limitations, including statutes of limi- 13 tations, related to a debt under Federal or state law shall 14 be tolled during the covered period. 15 ‘‘(g) CLAIMS OF AFFECTED CREDITORS AND DEBT 16 COLLECTORS.— 17 ‘‘(1) CLAIM.—A creditor or debtor may bring 18 an action in an appropriate bankruptcy court of the 19 United States— 20 ‘‘(A) asserting a taking under the Fifth 21 Amendment to the Constitution of the United 22 States as a result of this section; or 23 ‘‘(B) seeking a declaratory judgment re- 24 garding the constitutionality of this section. 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 12 •S 3565 IS ‘‘(2) EXCLUSIVE JURISDICTION.—The bank- 1 ruptcy courts of the United States shall have exclu- 2 sive jurisdiction over an action brought under this 3 subsection. 4 ‘‘(3) FINAL JUDGMENT.—The bankruptcy court 5 may— 6 ‘‘(A) enter a final judgment upon consent 7 of the parties; or 8 ‘‘(B) may issue a report and recommenda- 9 tion, which shall be subject to de novo review in 10 the appropriate district court of the United 11 States. 12 ‘‘(4) VALUATION OF PROPERTY.—In an action 13 described in under this subsection, the value of the 14 property alleged to have been taken without just 15 compensation shall be evaluated— 16 ‘‘(A) with consideration of the likelihood of 17 full and timely payment of the obligation with- 18 out the actions taken pursuant to this section; 19 and 20 ‘‘(B) without consideration of any assist- 21 ance provided directly or indirectly to the con- 22 sumer or small business from under any legisla- 23 tion enacted in response to a major disaster or 24 emergency. 25 VerDate Sep 11 2014 00:24 Apr 04, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S3565.IS S3565 13 •S 3565 IS ‘‘(5) SCOPE OF JUST COMPENSATION.—In an 1 action under this subsection, any assistance or ben- 2 efit provided directly or indirectly to the any creditor 3 or debt collector under any legislation enacted in re- 4 sponse to a major disaster or emergency shall be 5 deemed to be compensation for the property taken, 6 even if such assistance or benefit is not specifically 7 provided as compensation for property taken by this 8 section. 9 ‘‘(6) APPEALS.—Any appeal from an action 10 under this subsection shall be treated under section 11 158 of title 28, United States Code, as i [Text truncated for display. 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