The Massachusetts Attorney General has issued guidance on the revised debt collection rules that became effective on March 2, 2012. The Attorney General’s guidance released on January 24, 2013 clarifies certain rights and obligations that creditors have when collecting debts from persons within Massachusetts. Among other things, the revised debt collection rules impose an automatic stay on debt collection activities if the borrower provides notice that the debt, or any portion of it, is in dispute. The stay remains in place until the creditor produces the documents necessary to validate the debt, under the revised rules. The guidance clarifies that the automatic stay is not intended to limit the ability of home mortgage lenders to contact delinquent borrowers about loss mitigation programs that may benefit the borrower. Such communications with a borrower are for loan servicing purposes in an effort to assist the consumer, not debt collection purposes. According to the guidance, the Attorney General expects creditors to act in good faith and exercise due diligence to produce documentation sufficient to validate the debt. If a creditor has certain documentation in its possession, which serves to verify the identity of the borrower and the amount of the debt owed to the creditor, then those must be included in the materials provided to the borrower.

Nutter Notes: The recent amendments to the debt collection rules expanded the scope of the rules to cover debt collection activities involving cell phone and text messaging and to make first mortgage loans and consumer loans in excess of $25,000 subject to the rules. According to the revised rules, creditors may not initiate a communication with a borrower by telephone more than two times in a seven day period to the borrower’s home, cell, or personal telephone number. The guidance explains that one of the goals of this provision is to limit the fees that a creditor can impose on a borrower through calls, voicemails and text messages. According to the guidance, unsuccessful attempts to reach a borrower by telephone do not count toward the limitation on initiation of communication under this rule if the creditor is, in fact, unable to reach the borrower or to leave a message for the borrower. However, the guidance warns that the Attorney General may still consider enforcement action against any conduct, including initiation of communication by telephone, the natural consequence of which is to harass, oppress, or abuse a borrower.