In the aftermath of COVID-19, businesses are fighting to stay afloat.  This includes the difficult task of collecting receivables.  Adding to that difficulty, legislation has been introduced in the United State House of Representatives and the Senate impacting the ability to make those collection efforts.

In the senate, Senator Sherrod Brown (D-OH),  introduced SB 3565, titled: Small Business and Consumer Debt Collection Emergency Relief Act of 2020, with the goal to curb, if not prohibit, debt collection during the present national emergency.

By expanding the protections afforded under the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et. seq.) (“FDCPA”) to include small businesses while imposing sweeping prohibitions against the collection of consumer and commercial debt during national crises. During the period of national emergency for COVID-19 and 120 days thereafter, debt collectors would not be able to:

 1. Continue interest.

2. Sue.

3. Continue litigation started before the emergency.

4. Repossess or foreclose a security interest.

5. Report a past due debt to a credit reporting agency.

6. Take any action for non-appearance at hearing.

7. Garnish.

8. Accept a confession of judgment


Following conclusion of the emergency plus 120 days, collectors must:

1. Allow any prior payment plan to resume.

2. Allow a debtor to pay over a reasonable time.

This encompasses small businesses and non-profits as consumers and would allow 10(x) damages for violations.

Also introduced at the same time in the House is HR 3679, tilted: Take Responsibility for Workers and Families Act.  It mirrors many components of the senate bill suspending collection of debts and extends consumer protection to small businesses. Here are the highlights (or lowlights, depending upon your point of view):

Temporary moratorium on eviction filings. This section places a temporary nationwide ban on landlords from filing evictions on renters, except in some limited circumstances. The ban applies until six months after the date on which the Federal Emergency Management Agency terminates the emergency declaration made by President Trump on March 13, 2020.

 • Suspension of other consumer loan payments. This provision suspends changes to consumer agreements or legal actions for nonpayment on consumer loans during the crisis and prohibits creditors and third party debt collectors from charging late fees, higher interest, or pursuing consumers who fall delinquent on all non-mortgage related loans, while allowing for consumers to keep making payments during the crisis.

Mortgage forbearance. This provision prohibits foreclosures and repossessions for the duration of the pandemic and 180 days thereafter, and requires mortgage forbearance for homeowners for up to year, including a prohibition on fees or additional interest during the term of the forbearance, as well as loan repayment options at the end of the forbearance.

Debt collection. This provision prohibits debt collectors from taking any adverse action on consumers, small businesses, or non-profits during the pandemic period, and for the following 120 days. Debt collectors are prohibited from suing, reporting to a credit reporting agency, or taking any other adverse legal action against consumers, small businesses, or non-profits during the covered period, including on deficiency judgments or confessions of judgment.

Both bills only have only Democrat sponsors and no Republican supporters. Instead of remaining focused on individual and business economic relief to weather the public health and economic crisis, they include primarily ideologically motivated provisions.  Extending consumer protections into the commercial collections industry, making it difficult to obtain a broad consensus for passage and ensuring they have a very low chance of being enacted.

To stay up to date, you can follow both bills on Congress.gov: https://www.congress.gov/bill/.