CFPB Issues Advisory Opinion on Collection of Time-Barred Debt

The CFPB recently issued an Advisory Opinion affirming that a covered debt collector who brings or threatens to bring a state court foreclosure action to collect a time-barred debt may violate the Fair Debt Collection Practices Act (FDCPA) and its implementing regulation (Regulation F).  The Advisory Opinion is effective May 1, 2023.

The Advisory Opinion provides that the FDCPA and Regulation F prohibit a debt collector, as defined in the statute and regulation, from suing or threatening to sue to collect a time-barred debt, meaning a debt for which the applicable statute of limitations has expired.  The CFPB explained this prohibition in a final rule effective on November 30, 2021, previously covered by WBK here, stating, “a debt collector who sues or threatens to sue a consumer to collect a time-barred debt explicitly or implicitly misrepresents to the consumer that the debt is legally enforceable, and that misrepresentation is material to consumers because it may affect their conduct with regard to the collection of that debt, including whether to pay it.” 

The Advisory Opinion further explains that a debt collector who sues or threatens to sue to collect a time-barred debt violates the prohibition “even if the debt collector neither knew nor should have known that a debt was time barred,” because Regulation F’s prohibition on suits and threats of suit on time-barred debt is subject to a strict liability standard.

The Advisory Opinion applies to debt collectors as defined in the FDCPA and implemented in Regulation F.