Bill proposed by lawyer would exempt lawyers from debt-collection liability

|
Debt collection
Image Credit: Dreamstime
Team Clark is adamant that we will never write content influenced by or paid for by an advertiser. To support our work, we do make money from some links to companies and deals on our site. Learn more about our guarantee here.
Advertisement

A proposed bill that would exempt lawyers and law firms from liability in cases involving abusive debt-collection practices is raising concerns from consumer advocates.

One reason is because the architect of the bill, U.S. Rep. Dave Trott of Michigan, used to own a law firm and could stand to benefit from the legislation once it becomes law and he decides to return to the practice, critics say. Trott is planning on retiring in 2018, according to The Detroit News.

Trott, a Republican who started Trott Law PC, one of the state’s largest firms focusing on foreclosures, has said that his bill does not shield lawyers from being penalized under the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act was enacted by Congress in 1978 as a way to protect and empower consumers in fighting unreasonable payoff demands and determining the legitimacy and  accuracy of stated debts. The law specifically prohibits debt collectors from using “false, deceptive or misleading representation” as a means to collect outstanding funds.

Michigan lawmaker’s bill would exempt lawyers from debt protection (he’s a lawyer)

Trott’s bill, HR 1849 or formally the “Practice of Law Technical Clarification Act of 2017,” says that its purpose is “to amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of a debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes.”

Money expert Clark Howard says that it’s incredible that a lawmaker would try to capitalize on consumers by amending the law. “A member of the U.S. Congress should not use the trust of his constituents to feather his own nest,” Clark said.

Earlier this month, in opening remarks at a hearing of the House Subcommittee on Financial Institutions and Consumer Credit, Trott defended his legislation, saying: “This limited targeted and common-sense bill clarifies that attorneys engaged in litigation should not be subject to interference by federal agencies,” according to testimony summarized by trade group, ACA International.

But that’s not what is being said by Michigan residents, many of whom voted for him. “Congressman Trott’s use of his official office to financially benefit his family’s foreclosure company is the reason why people don’t trust career politicians in Washington,” Canton resident Cori Carr was quoted as saying on electablog.com, a political news blog. “We elected him to represent us, not to financially benefit his family’s foreclosure company.”

April Kuehnhoff, a staff attorney with the National Consumer Law Center in Boston, told The News that a measure that eliminates liability for large legal practices that do nothing but target debt-ridden consumers would send an alarming signal. She said that law firms that represent debt collection firms oftentimes employ questionable tactics to get people to pay up, including filing false pleadings or trying to strike last-minute deals just outside the courtroom.

“All of these practices are litigation-related practices that attorneys are engaging in, and debt collection is a huge portion of what happens in trial courts around the country,” Kuehnhoff was quoted as saying. “The idea that state regulators or bar advocates or the courts themselves are going to be able to take care of all of this is really unrealistic. These regulators are overwhelmed dealing with other important regulatory matters.”

Perhaps unsurprisingly, many in the legal field back Trott’s bill. ACA International, the trade association for credit and collection professionals, has come out in support of the legislation, saying it “is important to ensure that federal regulators do not impermissibly use their authority to regulate the practice of law, an authority that is properly left to the judicial branch.”

In August 2015, Michigan lawyer Andrew J. McGuinness filed a class-action lawsuit against Trott Law PC, alleging that the firm violated numerous consumer protection laws, including deceiving people into thinking that correspondence was sent by lawyers when that was not the case, and by not including the total debt amount “inclusive of attorneys’ fees.”

Trott, through a spokesman, has denied that he drafted his bill to benefit himself and said that critics are misrepresenting the legislation. “The technical correction proposed in HR 1849 would not help Rep. Trott or his former law firm in any way, and the legislation would have no impact on the frivolous lawsuit,” his spokeswoman Katie Vincentz told The News.

Meanwhile, Trott’s bill has been referred to the Committee on Financial Services.

RELATED: Clark says know your rights when it comes to debt collectors

RELATED: What to do if debt collectors are harassing you

Advertisement
Author placeholder image About the author:
Members of our editorial team contribute to content published by "Clark Howard Staff." To keep up with our latest news, follow us on Facebook and Twitter.
View More Articles
  • Show Comments Hide Comments