North Carolina Debt Collection Laws
North Carolina recently enacted new legislation, Senate Bill 974 that changes debt collection practices statewide.
Lawsuits and Arbitration on Time-Barred Debt
The new bill would prevent a collection agency in North Carolina from bringing suit, initiating arbitration or attempting to collect a debt when the debt collector knows or should know that the debt is past the statute of limitations. This does not prevent the collector from sending letters or placing phone calls since those activities are not prohibited under the statute of limitations.
Restrictions on Debt Collection
The bill also prevents a debt collector from bringing suit, initiating arbitration, or attempting to collect a debt without first having:
- Valid documentation of the owner of the specific debt; and
- Reasonable verification of the amount of the debt allegedly owed
Requirements for Filing Suit
In order to file suit, a North Carolina debt collector must first give the consumer a written notice of intent at least 30 days prior to the filing. This notice must contain the amounts owed and proof of ownership of the debt. In addition, the debt collector’s license number must also be included.
Penalties for Debt Collectors in North Carolina
The new North Carolina Senate Bill 974 will also increase the penalties paid by debt collectors for violations of the law to equal no less than $500 and no more than $4,000 per violation.
