Here is everything we know so far about how novel coronavirus is affecting collectors.

We are closely following the COVID-19 pandemic and how it is affecting the debt collection industry. We will be updating this blog post as we find out more. Thank you to InsideARM, AccountsRecovery.net and ACA International for continuing to keep the industry informed!

Table of Contents

Areas that Have Suspended Certain Types of Collection
Chicago

Chicago Mayor Lori E. Lightfoot announced that the city of Chicago will be temporarily suspending debt collection practices and non-safety related citations and impounds, as well as penalties for late payment taking effect through April 30, 2020. The order pertains to debt owed to the city of Chicago.

Nevada

In Nevada, all collection agencies holding a license or certificate under Nevada Revised Statutes Chapter 649 and located out-of-state must cease collection efforts with Nevada consumers/residents effective midnight March 20, 2020, until April 16, 2020

New York

New York Attorney General Letitia James and New York Governor Andrew M. Cuomo announced on March 17 that, effective immediately, the state will temporarily halt the collection of medical and student debt owed to the State of New York and referred to the Office of the Attorney General (OAG) for collection, for at least a 30-day period.

The OAG collects certain debts owed to the State of New York via settlements and lawsuits brought on behalf of the State of New York and state agencies. A total of more than 165,000
matters currently fit the criteria for a suspension of state debt collection, including, but not limited to:

  • Patients that owe medical debt due to the five state hospitals and the five state veterans’ home
  • Students that owe student debt due to State University of New York (SUNY) campuses; and
  • Individual debtors, sole-proprietors, small business owners, and certain homeowners that owe debt relating to oil spill cleanup and removal costs, property damage, and breach of contract, as well as other fees owed to state agencies. 

The temporary policy will also automatically suspend the accrual of interest and collection of fees on all outstanding state medical and student debt referred to the OAG for collection, so New Yorkers are not penalized for taking advantage of this program.

Massachusetts

State-owned debt and related collection activity are temporarily on hold in Massachusetts until April 7, according to a notice from Massachusetts Comptroller of the Commonwealth. This suspension will be re-evaluated before April 7 and will be continued or lifted at that time.

South Carolina

A state lawmaker in South Carolina is calling on the governor to enact a 60-day moratorium on the collection of medical debts to help people in financial distress caused by the coronavirus pandemic.

North Carolina

Debt collections made by the North Carolina Department of Justice are being suspended until further notice. Stein is also asking all local and municipal utilities to commit to maintaining access to water, electricity, gas, and other services for residents.

Ohio
A member of the Ohio House of Representatives introduced a bill yesterday that would prohibit debt collection there.
The SBA is Providing Low-Interest Disaster Loans to Help Businesses Recover from Declared Disasters

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.

Once a declaration is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on our website: SBA.gov/disaster.

SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.

SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.

For additional information, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 or e-mail disastercustomerservice@sba.gov.

Bill Banning Collection During Major Disasters Introduced

On March 22, S. 3565 was introduced to the Senate. 

S. 3565 would 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.

D.C. Superior Court Temporarily Suspends Non-Emergency Landlord-Tenant and Debt Collection Hearings

According to the press, D.C. Superior Court, where the city’s civil and criminal cases are handled, is suspending a number of hearings for the next several weeks to limit public interactions.

On Friday, the court announced it “will suspend evictions of all tenants and foreclosed homeowners.”

Work from Home Licensing Requirements Were Relaxed

According to InsideARM, several states have relaxed their work-from-home licensing requirements for debt collection agents. Typically, in order to work out of their residence, a debt collector would need to register his or her address as a branch office with state regulators. Several states are temporarily allowing an exception to this requirement.

Here are the states that have made the announcement (as of March 16)

  • Connecticut
  • Idaho
  • Oregon (email sent to licensees)
  • Massachusetts (email sent to licensees)
  • Michigan (not quite as clear, but a memo from Mich. Dept. of Health and Human Services recommends working from home "when feasible")
  • Minnesota
  • Nevada

An important reminder from Jud Phillips of Capital Compliance Group:

"One thing worth remembering, as of right now, there are no extensions for regulatory filings. If you have a license renewal coming up, so far coronavirus is not an excuse to miss it."

The Nationwide Multistate Licensing System & Registry (NMLS) has created a webpage containing licensing guidance for each state. It can be found here: Guidance on Coronavirus

Senate & House Pass Relief Bill, Which Will Restrict Student Loan Collections Only

Individuals with student loans will be exempt from having to make payments on those loans through Sept. 30, and no interest will be allowed to accrue on the loans during that period.

Credit card issuers are helping consumers affected by coronavirus
Chase 

"With many of us staying closer to home, I encourage you to use tools on the Chase Mobile® app and chase.com whenever possible to keep track of your accounts and do things like make payments and deposit checks. If you’re affected by COVID-19 and need help with your accounts or making payments, please reach out to us."

Wells Fargo

Wells Fargo has also activated assistance for employees via its WE Care Fund, which provides grants to Wells Fargo colleagues who face a catastrophic disaster or financial hardship resulting from an event beyond their control. This program is available to those affected by coronavirus and is intended to help team members, especially those with limited resources, get back on their feet with basic necessities.

Capital One

"We understand that there may be instances where customers find themselves facing financial difficulties. Capital One is here to help, and we encourage customers who may be impacted or need assistance to reach out to discuss and find a solution for you."

Citi Bank

"Should you be impacted by COVID-19 and need our support, we're here to help. Effective Monday, March 9, 2020 for an initial thirty days, contact us for assistance with:

  • For Retail Bank Customers: Fee waivers on monthly service fees; waived penalties for early CD withdrawal.
  • For Retail Bank Small Business Customers: Fee waivers on monthly service fees and remote deposit capture; waived penalties for early CD withdrawal; Bankers available after hours and on weekends for support."
CFPB Provides Policy Statement: Credit Reporting During COVID-19
The continued operation of the consumer reporting system will play a critical role in the functioning of the consumer financial services market, promoting fair and efficient access to credit and benefiting consumers and creditors alike.”

The CFPB will ease its enforcement of meeting the FCRA's strict dispute investigation timelines on a case-by-case basis. The CFPB also urged furnishers to work with consumers to be flexible and provide relief where appropriate and where required by the CARES Act.

Legislation introduced last week by Sens. Sherrod Brown, D-Ohio, and Brian Schatz, D-Hawaii that would require a four-month moratorium on all negative credit reporting, was shelved. 

The three credit bureaus have been encouraging consumers to talk to their lenders to see if assistance is available, and to pay whatever they can afford. Equifax and TransUnion are also advising consumers that they can add a comment to their credit reports noting that they are unable to pay because of the pandemic.
Section 4021 of the CARES Act states that if an accommodation is made on behalf of a consumer by the furnisher, the furnisher should continue to report the account as current if the consumer fulfills the terms of the accommodation. This would not apply for debts that were delinquent before the pandemic.

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