Debtor Protections Expanded by N.C. House for Families Under Financial Strain During Pandemic

Raleigh, N.C. – Enhanced protections for debtors under financial strain during the pandemic were approved by the North Carolina House of Representatives in a bipartisan vote on Tuesday.

House Bill 1067 Modernize Debt Settlement Prohibition explicitly prohibits abusive transactions that circumvent current law regulating debt collection, such as structuring fee payments to avoid the definition of an illegal debt settlement.
The bill is supported by consumer advocates as well as the Resident Lenders of North Carolina, and drew bipartisan support in the state House of Representatives on Tuesday.
H.B. 1067 expressly applies to activities of debt collectors’ affiliates and transfers prohibitions on debt adjusting from North Carolina’s criminal code to its civil protections, broadening the scope of regulation to help consumers targeted by unlawful collection methods.
To expand prohibitions on illegal debt adjusting and debt settlement, H.B. 1067 makes those actions an unfair trade practice subject to civil remedies, voids any contracts for those practices, and makes administrative changes to support those reforms.
H.B. 1067 is sponsored by Rep. Julia Howard (R-Davie), Rep. Jason Saine (R-Lincoln), and Rep. Michael Wray (D-Northampton).
“The North Carolina House continues to identify critical reforms to support families across our state facing tremendous financial challenges amid an economic shutdown,” Reps. Howard, Saine, and Wray said in a joint statement Tuesday.
“We appreciate the strong support of our colleagues and collaboration of stakeholders in North Carolina’s lending industry to produce legislation preventing abusive collections practices and benefiting our state’s business climate.”
Speaker Tim Moore (R-Cleveland) praised the bipartisan effort to continue helping North Carolina families facing economic uncertainty.
“The North Carolina House is committed to doing everything we can for folks impacted by unprecedented financial peril, and stopping abusive collections practices is an important part of helping families and businesses through this pandemic,” Speaker Moore said Tuesday.
The legislation would become effective July 1, 2020, and apply to offenses committed on or after that date.