Advocates Call for Action on Rental Debt

Advocate Andy

Consumer Group Calls for Protection for Renters

Advocates at the National Consumer Law Center (NCLC) released a policy brief on rental debt today and subsequently called on the Consumer Financial Protection Bureau (CFPB) to protect renters in light of the challenges presented by the COVID-19 pandemic.

“Renters have been especially hard hit by the COVID-19 pandemic, and the Bureau should do everything in its power to protect their ability to obtain decent and affordable housing,” said Ariel Nelson, staff attorney at the National Consumer Law Center.

Alleged rental debt can haunt a renter long after they have vacated a housing unit, whether they left because of an eviction or voluntarily moved out. Rental debt can lead to wage garnishment, harassment by debt collectors, and negative marks on credit reports resulting in lowered credit scores.

According to NCLC’s survey, The vast majority (71%) of attorneys who represented consumers with rental debt pre-pandemic reported an increase in the number of consumers with alleged rental debt from June to August 2021 compared to their caseload pre-pandemic.

“Negative credit report entries can present a long-term barrier to renters obtaining new housing,” said Chi Chi Wu, staff attorney at the National Consumer Law Center. “In fact, about half (49%) of the attorneys who responded to the survey reported their clients had trouble finding housing as a result of alleged rental debt reported on a credit report.”

In October, U.S. Senator Sherrod Brown noted that rental debt or alleged rental debt can have long-term, negative impacts for consumers.

A review of documents and relevant data submitted to Brown’s Senate committee showed that tenant screening companies appear to respond expeditiously to resolve complaints related to inaccurate information contained in screening reports. Nonetheless, prospective tenants may be harmed by inaccurate tenant screening reports as landlords are not required to delay renting a property to another tenant while an adverse decision is being challenged. This results in applicants potentially losing out on both the housing opportunity and the non-refundable rental application fee, which includes the cost of the tenant screening report, required when applying for rental housing.

When it comes to rental debt, NCLC is recommending that the CFPB do the following:

  • Require debt collectors, including attorneys for landlords, to provide notice about Emergency Rental Assistance Program (ERAP) funds.
  • Prohibit debt collectors from seeking payment for amounts that were or will be paid by ERAP or similar funds and require collectors to pause collection efforts, including evictions, where the collector has notice that an application for ERAP funds has been submitted.
  • Clarify that states are not preempted from adopting laws to exclude pandemic-era eviction and other negative information from tenant screening reports.
  • Prohibit credit reporting of rent arrears if ERAP funds have been paid or an application has been submitted, and require deletion of any such collection items.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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