government affairs
By David D. Cherner
A Year of Uncertainty
State legislatures begin anew during a tumultuous election year
The credit, collection and asset buying industry has endured a year of many challenges and
opportunities for small and large
businesses attempting to serve our
national economy. Consumer protection
and state budgets were the predominant
features of 2009 state legislatures.
States have been desperately seeking
ways to fix long-standing budget
problems that bubbled to the surface
after the collapse of the subprime
lending market and the precipitous fall
in tax revenue thanks to declining
property values and increasing
unemployment. But this is only the
beginning. In October, the National
Conference of State Legislatures
released a report concluding the drop in
tax revenue will continue in 2010.
State departmental agencies and
legislators have attempted to mitigate
32 I January 2010 Collector
budget problems through traditional
tax policy—either increasing revenue
by raising taxes or implementing cuts
in state and local government services.
But if the credit and collection
industry was to look for a silver lining
in this recession, it may very well rest
in the budget crisis. Last year, a
number of state and local government
entities expanded and outsourced
collection of outstanding government
debt as a third leg of tax policy. From
big cities to small localities across the
country, the outsourcing of
government debt may be an important
niche market for the collection industry
to improve upon in 2010.
At the same time, states considered
and often enacted legislation that
negatively affected the ability of the
industry to effectively communicate
with consumers regarding resolution of
outstanding financial obligations. ACA’s
Government Affairs Department sees
four critical areas of state credit and
collection law that will continue to be
in the spotlight of state legislatures,
attorneys general, regulators and
consumer protection advocates.
• Collection of time-barred debt. In
2009, at least five state or local
jurisdictions either passed legislation
or introduced legislation or
regulation restricting or prohibiting
collection of time-barred debt.
These proposals either prohibit
collection of this debt outright or
require agencies to inform
consumers a debt is time-barred
before resuming collection efforts.
Some states are considering an
outright reduction in the applicable
statute of limitations for a debt,
thereby reducing the time in which a
consumer is obligated to pay a debt,
requiring the industry to seek legal
remedies for a debt in a court of law
much sooner.
Preparing for a Potential Political Shift
With national budgetary and
consumer protectionism waves
sweeping state and local jurisdictions
across the country, 2010 will be an
incredibly tumultuous election year. In
2010, 37 states will hold gubernatorial
elections, 30 attorney general offices are
up for election and 46 states will hold
legislative elections.
