In April 2021, members of the U.S. House of Representatives introduced H.R. 2547 – the Comprehensive Debt Collection Improvement Act (the “Act”). The Act passed the House on May 13, 2021, and is now in the Senate Committee on Banking, Housing, and Urban Affairs. The Act aims to expand debt collection protections for small businesses via the Small Business Lending Fairness Act (SBLFA).
Section 102(a) of the SBLFA amends the Truth in Lending Act (TILA) (15 U.S.C. 1631 et seq.) by adding a new section “140B. Unfair credit practices.” The new section 140B prohibits a person from taking or seeking to enforce an extension of credit or debt obligation that contains a confession of judgment (other than for executory process in the State of Louisiana), warrant of attorney, or other waiver of the right to notice and the opportunity to be heard in the event of suit or process thereon. The new section 140B also provides “The exemptions described in section 104 shall not apply to this section.”
Section 104 (15 U.S.C. 1603) of the TILA exempts “Credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, or to government or governmental agencies or instrumentalities, or to organizations.” The new section 140B will exclude this exemption as to the prohibition of a confession of judgment or warrant of attorney.
Compliance Systems continues to monitor this legislation for any impact to our solution.