Apr 18, 2011

New Mexico Debt Collection Rule Is a Victory for Debtors

FinalNoticeIStock.jpgNew Mexico's Attorney General will begin enforcing a new Rule which requires debt collectors doing business in New Mexico to (1) make a good faith effort to determine if collection of a debt is time-barred (meaning it is too late to sue for recovery of the debt in court) and (2) if it is time-barred, to so inform the debtor. The collector must also tell the debtor that signing a new agreement to pay the debt, or making a partial payment might "revive" the debt, resetting the time period that the collector has to sue on the debt. (To learn more about time-barred debts, and what that means for collection of the debt, read Nolo's article Time-Barred Debts: When Collectors Cannot Sue You for Unpaid Debts.)

The Attorney General implemented the rule in order to end "an industry-wide [debt collection] practice that tends to or does mislead or deceive" consumers by failing to provide important information to consumers - that is, that a debt is so old that it is legally unenforceable in court. The new Rule is a victory for consumers. As New Mexico Attorney General King said: "This Rule is intended to ensure that debt collectors provide important information to consumers so that they can make informed decisions when they are confronted with a demand to pay an old unenforceable debt."

The law went into effect on December 15, 2010, but the Attorney General delayed enforcement until March 15, 2011 in order to give debt collectors time to revamp their practices. You can read the Attorney General's announcement here. The announcement contains a link to the text of the new rule.

By: Guest Blogger Kathleen Michon