CFPB FDCPA – What is “debt?”

Compliance > FDCPA
Q:   What is “debt?”
 
A:   Generally, the Debt Collection Rule regulates a debt collector’s communications regarding a debt, attempts to communicate about a debt, and other conduct with regard to a debt. The Rule defines “debt” as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes. An obligation can be a
debt regardless of whether or not it has been reduced to a judgment. 12 CFR 1006.2(h).
 
As defined in the Rule, a debt only includes an obligation or alleged obligation of a consumer. See 12 CFR 1006.2(e). A consumer includes any natural person, living or deceased, who incurred or allegedly incurred the debt. The Rule only applies to debt incurred or allegedly incurred by a natural person. The Rule does not apply to the collection of an obligation or alleged obligation of a company or similar business entity. Comment 1006.2(h)-1.
 
Additionally, because a debt must arise from a transaction that is primarily for personal, family, or household purposes, the Rule does not apply to the collection of a debt that was incurred primarily for a business purpose. See 12 CFR 1006.2(h).
 
 
This Q&A was created based on information from the CFPB’s Debt Collection Rule Small Entity Compliance Guide - April 2021 (which may be updated from time to time).  This may be found on the CFPB’s website here:  https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_small-entity-compliance-guide.pdf
 

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