Last Friday, the North Carolina Department of Insurance issued an order and bulletin enacting emergency provisions that require debt collectors – including debt buyers – to provide North Carolinians with the option of deferring payments that are due during North Carolina’s major disaster proclamation. The Department provided an amended order on Monday, March 30. The deferral period is 30 days from the due date of payment, and the provisions take effect on March 27 and expire 30 days later, on April 26, 2020.
Although not entirely clear on the face of the orders, Deputy Commissioner Angela P. Hatchell confirmed through email that this emergency provision applies to debt payments generally, not just on those relating to insurance.
Pursuant to the authority vested in the North Carolina Insurance Commissioner during a major disaster, Commissioner Mike Causey declared that the provisions of North Carolina General Statute § 58-2-46 took effect in all of North Carolina’s counties. Specifically, § 58-2-46 declares:
[Entities] subject to this Chapter shall give their customers who reside within the geographic area designated in the proclamation or declaration the option of deferring premium or debt payments that are due during the earlier of (i) [the time period covered by the proclamation or declaration or (ii)] the time period prior to the expiration of the Commissioner’s order declaring subdivisions (1) through (4) of this section effective for the specific disaster, as determined by the Commissioner. This deferral period shall be 30 days from the last day the premium or debt payment may be made under the terms of the policy or contract.
A collection agency is defined as “a person directly or indirectly engaged in soliciting, from more than one person delinquent claims of any kind owed or due or asserted to be owed or due the solicited person and all persons directly or indirectly engaged in the asserting, enforcing or prosecuting of those claims.” NCGS § 58-2-46. Notably, debt buyers, which are persons or entities that are “engaged in the business of purchasing delinquent or charged-off consumer loans or consumer credit accounts, or other delinquent consumer debt for collection purposes, whether [they collect the debt [themselves] or hire a third party for collection or an attorney-at-law for litigation in order to collect such debt,” are expressly included in North Carolina’s definition of a collection agency. NCGS § 58-70-15.
Unlike in Massachusetts, where debt collectors have been prohibited from outbound communications with individuals, in North Carolina, debt collector communications need not stop based on this bulletin.
Collectors must revise their inbound and outbound communications in response to the Department of Insurance’s directives. A debt collector must inform a consumer of the option to defer premium and debt payments during any communication. However, it remains up to the consumer to state his or her desire to exercise this option. Should the consumer choose to defer payments, a collector may not impose any additional fees. Notably, these orders do not appear to impose any affirmative duty on collectors to reach out to consumers and inform them of a deferment option.
We will continue to provide updates of this enactment, including whether the North Carolina Department of Insurance provides clarity about which collections are subject to § 58-2-46 and whether guidance is offered regarding the specific language to be used when communicating this deferral period to individuals.