News & Resources

States changing debt collection laws

Jan 25, 2011 Kyle Duncan

Many states are changing laws when it comes to the information they force lenders to give to borrowers in debt. The latest state to adopt these laws is New Mexico, which will soon join other states, including Wisconsin and Mississippi, in forcing creditors to tell customers that they may be taken to court if they do not pay debts for an extended period of time. Debt collectors in New Mexico will also have to tell people if their loans have passed the statute of limitations. One of the people in favor of this new legislation is Federal Trade Commissioner Julie Brill. She said that she was looking for the federal government to make debt collection laws more consumer-friendly. "To prevent deception, collectors who seek to collect debt they know or should know is time barred should disclose that they cannot lawfully sue the consumers," she said in an interview with The Wall Street Journal. "I believe that it is time for Congress to amend federal law to prohibit such collection efforts." Brill made other headlines recently for additional consumer advocacy work. The FTC settled with the Kellogg Company, forcing it to pay $5 million for falsely claiming that the brand's Rice Krispies cereal helped support children's immunity with its vitamins and antioxidants.