Fair Debt Collection Practices for Servicemembers Act

This bill adds special protections for servicemembers and their families against abusive debt collection. It says debt collectors cannot threaten to get someone demoted, take away a security clearance, or have them punished under the Uniform Code of Military Justice just to make them pay a debt. These rules cover active-duty members, selected reservists, certain dependents, and people within one year after leaving service. Debt collectors can still share accurate, legal information about a debt, but not make those threats. The bill also labels it an unfair practice to claim that refusing to “cooperate” will cause a rank reduction, a clearance loss, or military prosecution .

The bill directs a federal watchdog to study how these changes affect timely delivery of information to servicemembers, military readiness, and national security, including how uncollected debt might affect people with security clearances .

• Key points
  • Who is affected: Active-duty servicemembers, certain dependents, selected reservists, and recent veterans (within 1 year of separation) .
  • What changes: Debt collectors cannot threaten rank reduction, loss of clearance, or military prosecution; claiming those outcomes for not “cooperating” is also banned. Sharing accurate, lawful debt info remains allowed .
  • When: If enacted, these new rules would be added to the Fair Debt Collection Practices Act; a government study would follow to review impacts .