Yesterday, the D.C. Council voted unanimously to pass new emergency debt collection legislation -- introduced by Chairman Mendelson and DC Attorney General Racine -- implementing much-needed updates to the District’s debt collection law to protect DC consumers.
Among other changes, the Protecting Consumers from Unjust Debt Collection Practices Emergency Amendment Act of 2021 updates and strengthens the District’s existing law by:
- Expanding its scope to apply broadly to consumer debts, including finally applying to credit card debt and medical debt (the law was initially drafted fifty years ago and had become largely obsolete, failing to cover most modern-day forms of consumer debt)
- Protecting broadly against unfairness and harassment of consumers in the debt collection process, both in and out of court
- Requiring collectors to have adequate information and documentation to substantiate the debts they collect
- Creating a universal three-year statute of limitations for all covered debts, and protecting consumers from the harms of “zombie” debt collection (revival of old debt obligations)
- Building in enforcement mechanisms like a private right of action, and subjecting debt collectors’ lawsuits to dismissal for failure to comply
The timing of the legislation is critical. Early in the pandemic, the DC Council passed emergency legislation putting most types of debt collection on hold for the duration of the District’s public health emergency and for sixty days after. The moratorium has temporarily staved off the spiraling impacts of debt collection for thousands of consumers, but these same consumers are at risk of being swept up in a flood of debt collection lawsuits, attempts to garnish wages and bank account funds, and other forms of debt collection when the moratorium expires in September.
The health and economic impacts of the pandemic have exacerbated the financial situations of many residents, with more than 26% of DC residents reporting using credit cards or loans to meet their spending needs during the pandemic, and 9% reporting not having enough to eat according to a survey conducted by the Census Bureau in April and May of 2021. And debt collection disproportionately harms Black and Brown residents: according to data from the Urban Institute, 36% of people in communities of color have debt in collections, more than five times the rate in white communities.
Given the economic stability and racial justice implications of the end of the debt collection moratorium, the DC Council needed to act swiftly to bring the District’s debt collection law into the 21st century and institute policy reforms supporting a more equitable pandemic recovery. We applaud the DC Council for voting to bring these protections to DC residents, which will make a substantial difference in mitigating the intensity of harm flowing to the District’s most vulnerable consumers coming out of the pandemic.
While the emergency legislation will provide immediate and necessary relief before the moratorium ends, District consumers will need these updates and improvements to the debt collection law on a permanent basis. The real-life harms of debt collection run deep and have never been limited to the pandemic, as shown by the experiences of several Legal Aid clients:
“We are all in a pandemic now – but for me, it’s as if I have been in a pandemic my whole life because of my struggles. I feel like the systems for credit and interest have been set up to make people fail. You keep paying and paying and it’s not getting me anywhere. And the creditor is paying someone else to harass you. It makes you want to give up. It can affect you mentally. It can affect you in your pocket, but it can also be very emotional. Thinking about having to take money away from the rent that’s keeping a roof over your head. Every dollar I spend takes money away from something else. I want to lead a simple life and not be in debt.” – Patricia, Ward 5
"The whole process is stressful. Before being sued, the constant calls and veiled threats constitute borderline harassment. It's then very stressful having to take time off to go to court. It's especially difficult to have to explain to your employer why you can't go to work that day. It all becomes overwhelming." - Isaac, Ward 7
“Just the thought of having to go to court was very emotional for me. I wouldn’t wish that on anybody. Never knowing what the outcome will be, is very emotional and frustrating.” – Ruth, Ward 7
District consumers need debt collection protection both in the immediate term and for the long road to recovery. We appreciate and applaud Chairman Mendelson’s and Attorney General Racine’s leadership and all the effort put in by their offices to bring this urgently-needed relief to DC residents. We also appreciate the work of Councilmember Cheh for years of advocacy and support working to improve and update the District’s debt collection laws. We look forward to working with the DC Council and the Office of the Attorney General to support the passage of permanent legislation in the coming months.