NCBA Seeks Critically Important Advisory Opinion from CFPB


On June 22, NCBA submitted an Advisory Opinion Request (AOP), seeking guidance from the CFPB regarding Communication with Consumers who have been represented by bankrupt or defunct law firms. Recently two large credit repair companies with legal and regulatory problems—Lexington Law and Litigation Practice Group—representing millions of consumers, filed for Chapter 11 bankruptcy protection. As a result of “going out of business”, many consumers who believed they had legal representation no longer do, or may never have been represented by an attorney at all. This unusual situation creates a serious problem for both consumers and creditors rights attorneys, prompting our request for clarity.

NCBA thanks the law firm of Barron & Newburger, P.C., specifically Manny Newburger and Brit Suttell, for offering to lead the effort to draft this Request.

Manny and Brit, worked closely with NCBA’s advocacy pillar co-chairs, leadership and staff to effectively make the case that this lack of clarity has several ramifications. It ultimately prevents consumers from restoring their credit standing and, in many instances, has the potential to prevent sales of consumers’ homes or much-needed purchases and credit extensions. Quite simply, NCBA writes, “consumers need an advisory opinion so that they can be protected from the fallout of bankruptcies like the Litigation Practice Group and Lexington Law,” two firms at the heart of this issue.

Further impact to members and consumers, as stated in the AOP, include:

“NCBA members face urgent requests from consumers to maintain their payment plans, to satisfy or settle their debts, or merely to discuss their options. As a result of the protections afforded by Section 805(a)(2), the member firms cannot communicate with those consumers, even when they are told “I can’t reach my attorney” or “the law firm seems to have shut down, and I don’t know who is representing me anymore.” The prior notice of representation still binds the creditors’ attorneys until either the consumer’s (possibly former) attorney consents to direct communication with the consumer or “fails to respond within a reasonable period of time” to the NCBA member.

Unfortunately, the FDCPA does not define what constitutes a “reasonable period of time” for an attorney to respond. Although industry commenters requested that Regulation F provide a definition, the Bureau declined to do so. See, e.g., 85 FR 76734, 76798. At the time, the Bureau was not presented with the circumstances described above. NCBA believes that these large law firm bankruptcies which affect consumers throughout the United States present a sufficient reason to issue an advisory opinion as contemplated by Congress in Section 813(e) of the FDCPA (15 U.S.C. § 1692k(e)) providing guidance as to what is a “reasonable period of time” for an attorney to respond to a debt collector.”

While historically many of these requests go unanswered by the CFPB, submitting this critically important advisory opinion formally elevates the question at-hand and puts NCBA member firms on the record. The advisory opinion NCBA seeks will positively impact the very consumers the Bureau serves and importantly could provide much needed clarity to our members.

Generally, industry would benefit from a CFPB opinion as to what constitutes a “reasonable period of time” for a consumer’s attorney to respond under Section 805(a)(2) of the FDCPA. The request outlined in our AOP inquiry is narrower than the broad guidance requested in the industry comments to Reg. F.

Specifically, NCBA asks the question, in the context of Section 805(a)(2) of the FDCPA (15 U.S.C. § 1692c(a)(2)), what is a reasonable period of time for an attorney to respond when the law firm for which the consumer’s attorney allegedly works has filed for bankruptcy or otherwise ceases to operate?

The submission of this AOP is one of many ways NCBA actively ensures our industry has the proverbial “seat at the table,” and how, as an industry leader, NCBA is the only specialty bar association exclusively advocating for attorneys and law firms practicing creditors rights law. We are - the voice of creditors rights lawyers.