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).