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In a move that provides clarification and more consistency with the FDCPA but widens the gap as to the treatment of collection agencies and non-collection agency debt collectors, North Carolina has modified its Debt Collection Act (the “NCDCA”) to conform more closely to the FDCPA regarding third party communications.
North Carolina has a bifurcated statutory scheme regarding its collection statutes. Chapter 58 of the North Carolina General Statutes regulates the collection efforts of collection agencies and debt buyers. Chapter 75 of the General Statutes regulates all others engaged in debt collection, including original creditors. The modifications to the statute, which were enacted on August 5, 2015, and took effect immediately, apply to Chapter 75 only and serve to clarify what is appropriate regarding contact with third parties.
As things stand now, third party communication rules in North Carolina are as follows:
The third party contact rules are codified in the North Carolina Collection Agency Act (the “NCCAA”) at N.C.G.S. §58-70-105 and prohibit communication with any person other than the debtor or his attorney except:
Collection agencies and debt buyers operating in North Carolina should be aware that the NCCAA applies not only to the collection of consumer debt but also to the collection of commercial debt.
Unlike the NCCAA, the NCDCA only applies to consumer debt defined as being any debt incurred for personal, family, household, or agricultural purposes. The third party contact rules are codified at N.C.G.S. §75-53. As amended, debt collectors (which include original creditors) are prohibited from communicating with any person other than the debtor or his attorney except:
There are three key amendments to the statute specific to third party communications:
The statute additionally provides clarification that under the NCCAA, creditors and other non-collection agency/debt buyer debt collectors are allowed to collect their filing fees and other court costs.
Caren Enloe is a partner who concentrates her practice in consumer financial services litigation and compliance, bankruptcy, and commercial litigation with an emphasis on creditor’s rights. She has a deep understanding of the complex compliance environment surrounding the financial services industry and regularly advises financial service companies on licensing and compliance issues involving state and federal consumer protection and finance statutes. Caren is the author of a daily blog titled: Consumer Financial Services Litigation and Compliance where she posts timely and informative updates regarding the CFPB, FTC, and a host of topical litigation issues involving consumer protection law....LEARN MORE