Under new Trump rules, debt collectors will be able to send unlimited texts and emails

Seeking to significantly update federal debt-collection rules for the first time in more than four decades, the Trump administration released a set of proposed new regulations on Tuesday that has left neither debt collectors nor consumer groups entirely satisfied.

Under the new regulations, debt collectors will be able to send an unlimited number of text messages and emails to delinquent borrowers; the number of calls they can make per week, however, will be curtailed.

The rules, proposed by the Consumer Financial Protection Bureau, are an update to the 1977 Fair Debt Collection Practices Act, which protects debtors from abusive and unfair practices by third-party debt collectors. The FDCPA, for instance, prohibits debt collectors from calling people before 8 a.m. and after 9 p.m.; and restricts collectors from calling “repeatedly or continuously” with an intent to annoy or harass. But the exact number of calls has, until now, not been specified.

Having been written in the 1970s, the FDCPA was enacted before the ubiquity of mobile phones, email and social media. As The Washington Post noted, debt collectors have expressed concerns about digital communications falling into a legal gray area and have asked for clearer rules pertaining to them.

Announcing the proposed amendments to the FDCPA this week, Kathleen Kraninger, the director of the CFPB, said in a statement that the new rules aim to “modernize the legal regime for debt collection.”

“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” Kraninger said.

Under the new rules, debt collectors will only be able to call a debtor up to seven times per week and if they manage to speak to the borrower, will have to refrain from calling back for at least 7 days.

Debt collectors will explicitly also be allowed to contact borrowers via text message and email. The rules state that collectors cannot engage in harassment and consumers will have the ability to opt-out of these communications, but no cap has been set on the number of texts or emails that can be sent.

The use of social media was also covered by the proposal, which seeks to bar debt collectors from using public-facing platforms to collect a debt. 

Related: The 10 US states with the most debt 

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The 10 US states with the most debt
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The 10 US states with the most debt

1. California

California has the highest debt-to-income ratio in the country. Residents of the Golden State make about $28,000 annually on average, according to U.S. Census Bureau data. The New York Federal Reserve Bank shows that Californians have a per resident debt balance of $65,740. This gives Californians a debt-to-income ratio of 2.34 on average. Like many other states, most of Californians’ debt is held up in their mortgages. Californians owe about $51,190 on their mortgages on a per capita basis. 

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2. Hawaii

Hawaii comes in second with a debt-to-income ratio of 2.1. On average Hawaiians make slightly more than Golden State residents. The median income in Hawaii is $31,905 as compared to $28,068 in California. Residents of Hawaii also have slightly more debt per capita than those in California: $67,010 to $65,740. Hawaiians have the second-highest proportion of debt tied up in mortgage. In total, $51,770 out of the total $67,010 in per capita debt that Hawaiians hold is owed on mortgages. That means 77% of per capita debt is mortgage debt. 

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3. Virginia

Virginia comes in third with a debt-to-income ratio just below 2. The average Virginian makes about $31,557 and has $62,520 in debt. One reason why lenders may feel safe lending to Virginians, allowing them to have a high debt-to-income ratio, is their low delinquency rates. Only 1.27% of mortgage debt in Virginia is delinquent by at least 90 days. That is the 13th-lowest rate in the country. Virginia also has a relatively high proportion of its debt in student loans (7.76%).

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4. Colorado

Of Colorado’s total debt, 6.85% is tied up in automobile debt. That’s the second-highest rate in the top 10. However it is quite a bit lower than the national average of 9.57%. Overall there is not much separating Colorado from Virginia: Colorado has a debt-to-income ratio of 1.96. The median income in Colorado is $31,664 and the per capita debt is $62,200.

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5. Utah

Like the rest of the top 10, Utah residents have the vast majority of their debt tied up in mortgages. Utah residents have $52,150 in per capita debt, $38,240 of which is mortgage debt. The state also has one of the lowest delinquency rates for mortgage debt. Only 1.05% of mortgage debt is 90 days past due in Utah. Again this may partially explain why lenders are so willing to lend to Utahans looking for mortgages. 

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6. Washington, D.C.

Almost 15% of all debt held in the nation’s capital is owed on student loan debt. All that higher education may be paying off though. D.C. has the highest median income in the country and over half of the population over the age of 25 has at least a bachelor’s degree. In fact, there are more people over the age of 25 in D.C. with a graduate degree (32.3%) than there are with only a bachelor’s degree (23.8%). The capital also has the lowest percent of debt in the country tied up in auto loans (3.35%), probably due to the accessible public transportation available in the area. 

Photo credit: Getty 

7. Oregon

Oregon has a debt-to-income ratio of 1.89. On average Oregonians make less than many other states in the top 10. The median income in the Beaver State is $26,188, according the U.S. Census Bureau. Oregon also has the least per capita debt in the top 10, at $49,550 per resident. For the most part Oregonians choose to go into debt to buy homes. Over 72% of overall debt is held in mortgages. One area where Oregonians struggle is in paying off credit card debt. Just over 7% of all credit card debt in the state is delinquent. One way to eliminate credit card debt is using a balance transfer credit card. With a balance transfer credit card, new users typically have a limited time to make no-interest payments. 

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8. Washington

Washington, Oregon’s northwest neighbor, comes in eighth for highest debt-to-income ratio. The state has the third-lowest percent of debt tied up in student loans (6.29%) but the third-highest percent of debt tied up in mortgages (75.35%). Washingtonians also tend to be some of the most responsible holders of debt in the country. They rank above average in delinquency rates on all types of debt and rank in the top 10 for lowest rates of auto loan delinquency and credit card delinquency. 

Photo credit: Getty 

9. Massachusetts

On average Massachusetts residents earn about $32,352 per year and have about $59,820 in debt per capita. That works out to a debt-to-income ratio of 1.84. Once again, like other states, the majority of that debt is mortgage debt. About 72% of per capita debt in the Bay State is mortgage debt. The state’s residents don’t take on as much credit card debt as other states do. About 5.45% of per capita is tied up in credit card debt

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10. Maryland

The Old Line State rounds out our top 10 states with the highest debt-to-income ratios. Maryland residents are some of the most well-off in the country, with an average individual income of $36,316. In terms of debt, Maryland residents have $67,020 in per capita debt, meaning their debt-to-income ratio is 1.84.

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“The Bureau believes that communications or attempts to communicate by social media platforms that are viewable by a person other than a person with whom a debt collector may communicate … risk exposing a consumer’s affairs to the public,” the proposal states, adding that such conduct could “have the natural consequence of harassing, oppressing, or abusing the consumer.”

Debt collectors and consumer groups alike have offered a mixed response to the new rules. 

Collectors said they were pleased the regulations included guidance on the use of digital communications.

“We’re very happy to see that email, text messages and voice mail are addressed, with clear guidance about how to use them lawfully. That’s a major step forward,” Jan Stieger of the Receivables Management Association International, a trade association which represents debt collectors, told The New York Times.  

Leah Dempsey of industry lobbying group ACA International took issue, however, with the cap on the number of calls debt collectors can make per week, calling the figure “arbitrary.”

The cap would “unnecessarily impede communications with consumers,” Dempsey, senior counsel for the group, told the Post.  

Consumer groups, on the other hand, have lauded the limit on the number of phone calls, though some have said the measure doesn’t go far enough. 

Consumer groups have also raised the alarm about the unlimited number of text messages and emails that will be allowed. 

“We see this as a step backward,” Lauren Saunders, the associate director of the National Consumer Law Center, told the Times.

The proposed rules would impact millions of Americans. According to the CFPB, almost 70 million people in the U.S. are contacted each year by a creditor or debt collector attempting to collect a debt.

The bureau will welcome public comments on the proposal for 90 days. According to the Associated Press, the rules will likely be finalized later this year or in early 2020. 

  • This article originally appeared on HuffPost.
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