DOVER, Del. (3/17/14)--Legislation has been introduced into the Delaware General Assembly that, while appearing to be consumer-friendly, has the potential to have unintended consequences that could negatively affect Delaware's credit unions, the Delaware Credit Union League said.
Delaware House Bill 230, the "Family Financial Protection Act," is designed to combat abuses in consumer debt collection that have risen from the growth of the debt-buying industry, robo-signing in debt collection and collection of stale debts.
"Delaware's credit unions are all about helping families, and have a long history and track record which supports this claim," said Pat Mahaney, Delaware league president (Together March 14). "Credit unions have opened a lot of doors for Delawareans--car doors, home doors and school doors."
The proposals included in legislation were taken from a model statute first published by the National Consumer Law Center.
The proposal, if adopted, would severely limit debt collection activities and increase the exemptions to protect debtors' assets, virtually eliminating a creditor's ability to collect unsecured debt, such as credit cards, the league said.
The increased hurdles to collect debts, coupled with the shrinking of available assets for recovery, could suppress consumer lending, the league said. Large segments of the population, including seniors, students, first-time home buyers and subprime borrowers, could find credit more difficult to secure. Some member businesses could also find funding more difficult to secure.
Ultimately, consumers will pay the price of increased operating costs as credit availability tightens in response to the limited possibility of recovering "bad" loans, the league said.
The league is working with Credit Union National Association counsel and local counsel to ensure the legislation protects the interests of state credit unions.