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Unscrupulous Debt Collection Practices
Category: Regulation | Area of Effect: Consumer Protection
Proposed by: Simone Republic | Onsite Topic
Note: Only votes from TNP WA nations, NPA personnel, and those on NPA deployments will be counted. If you do not meet these requirements, please add (non-WA) or something of that effect to your vote. If you are on an NPA deployment without being formally registered as an NPA member, name your deployed nation in your vote.The World Assembly (WA),
Noting the WA’s desire to protect the rights of borrowers, such as via GARs 476, 515, and 623;
Anxious that legitimate enforcement of overdue debts is not overshadowed by obnoxious behaviour by debt collectors;
The WA hereby enacts as follows:
- Definitions.
- "Associate" means an immediate member of the family of, or anyone who resides in the same address as, the debtor, guarantor or guardian (defined below).
- "Creditor" means who owns the debt due from a debtor (defined below), such as a bank.
- "Debtor" means anyone owing debts to a creditor and who is under the jurisdiction of a WA state.
- Debt collector.
- A debt collector ("collector") means any entity who endeavours to enforce overdue debts on behalf of a creditor. This includes relevant employees, contractors or agents ("personnel") of that entity engaging in such endeavours.
- This definition excludes anyone acting as an attorney for a debtor or a law enforcement officer.
- This resolution covers all debt collectors enforcing debts legally recognised as valid by a WA state, regardless of whether the creditor is from a WA state.
- Authorisation.
- Anyone who wants to conduct business as a collector must be duly authorised by a WA state (or by its sub-national authorities).
- A WA state shall promulgate standards for competence, professionalism and skills for a collector.
- A collector must maintain professional indemnity insurance deemed adequate by a WA state.
- This clause (3) covers the entity acting as a collector, including sole proprietorships as well as any personnel as defined in clause (2)(a).
- A collector needs to be separately authorised to work in each WA state (or in each sub-national division) and to comply separately with the provisions of this clause (3).
- Each WA state shall maintain a database of authorised collectors for verification. The said database shall be publicly available through convenient means.
- Behaviour. Collectors are banned from using the following means to enforce overdue debts, subject to standards set by each WA state and due process of law:
- take vastly disproportionate action against a debtor relative to the debts outstanding;
- harass or threaten the debtor or associates of a debtor, with demands for payment through such means which are likely to subject the said individuals to deep anxiety, distress, or humiliation;
- misrepresent themselves to be authorised in some government or WA capacity to claim or enforce payment;
- attempt to enforce debts that are known to the collector to be (i) not (or no longer) legally valid, or (ii) not yet overdue.
- Associates. For the purpose of debt collection, a collector may not contact:
- Anyone that agreed to act merely as a referee for the debtor.
- Anyone that is an associate of the debtor except to try to establish contact with the debtor.
- Anyone who is merely acquainted with the debtor, such as neighbours.
- An employer of the debtor (or any other known income source of the debtor) unless (i) the other parties can act as a garnishee according to local laws, and (ii) the debt collector has obtained all legal permission for garnishment.
- Recovery.
- A collector may not enforce a debt if the creditor's own expected recovery is less than the estimated cost of enforcement.
- A collector may not attempt to enforce debts against anyone after such debts are discharged, such as via bankruptcy.
- Guarantors.
- A collector may only attempt to recover debts from a guarantor of a debt only if it has exhausted all available means of collecting the debt from the debtor, unless the guarantor has explicitly consented to acting as a primary obligor and not merely as a surety.
- The protections under clauses (4) and (5) also applies to a guarantor or their associates.
- Legal competence.
- If a debtor is deemed legally incompetent after drawing down the loan as a result of ill health, accidents or other misfortune, no enforcement of debts may take place until a legal guardian is appointed, and the finances of the debtor has been organised pursuant to local laws.
- The protections under clauses (4) and (5) also applies to a legal guardian or their associates.
- Jurisdiction.
- Clauses (4) to (9) also apply to creditors who enforce overdue debts themselves.
- Each WA state is responsible for interpretation and enforcement of this resolution, including any penalties enforced.
- This resolution does not govern anything owed directly to the WA, WA organs, or a WA state.
Voting Instructions:
- Vote For if you want the Delegate to vote For the resolution.
- Vote Against if you want the Delegate to vote Against the resolution.
- Vote Abstain if you want the Delegate to abstain from voting on this resolution.
- Vote Present if you are personally abstaining from this vote.
For | Against | Abstain | Present |
6 | 4 | 0 | 1 |
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