Los Angeles City Council Urges Mayor to Prohibit Collections During COVID-19 Pandemic

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In an effort to increase protections for residents of the City of Los Angeles—in addition to the city mayor's already-enacted moratorium on evictions and rent freezes—the Lost Angeles City Council is urging the mayor to put a halt on debt collection altogether during the pandemic. The proposal, introduced by Councilwoman Monica Rodriguez, issued the motion, which states:

[T]he Mayor be requested to amend his “Safer at Home" emergency order to specifically declare collection agencies and credit agencies as “non-essential” businesses during the emergency, and further to impose a moratorium during this time on all debt collection efforts.

The motion has a date stamp of April 7, 2020. The mayor has not yet decided on this proposal. An important note is that if the mayor acts on this measure, it would impact only the city of Los Angeles, not the wider county.

insideARM Perspective

A Los Angeles Times article on this proposal mentions the conundrum faced with the governor's actions to ban garnishments and seizures on CARES Act stimulus checks—it's difficult for banks to determine what funds in a consumer's account are from stimulus checks, and which are not. 

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If banks can't tell the difference, argue consumer advocates quoted in the article, then there should be a ban on collections altogether. The article also quotes members of the industry who portray the important role that debt collectors play in a time like this. The article quotes the California Association of Collectors, who agreed to a temporary ban on new bank account levies and to stop collection activity if a consumer mentions their finances were impacted by the pandemic.

The LA Times article is a good read, please take a few minutes to give it a glance.