The phone rings. You cringe. You just know it is that collection company calling… again.
It won’t stop the calls, but new regulation under review will help protect you from lazy, greedy, and criminal-minded debt collectors.
“One of the biggest problems with debt collections today,” says NCES credit expert, George Cole, “is that the collection companies do a very poor job researching the debt bundles they buy. They know they will only collect pennies on the dollar, so it isn’t worth their time to do the work to validate the debts properly.”
What this means is that there is a good chance that those debt collection calls you are receiving are not actually valid in the eyes of the law. But current regulations are not stiff enough to force the collection companies to do what they are already supposed to be doing.
If the collection company does not have all the required documentation, they are not actually allowed to contact you to collect. New oversight under review by the Consumer Financial Protection Bureau may change all of that.
If these new regulations are approved, debt collection companies MUST:
Validate all data
Collectors will have to scrub their files and validate each and every debt before making a single call. They must have your full name, last known address, last known telephone number, account number, date of default, amount owed at default, and the date and amount of any payment or credit applied after default.
When collection companies buy a bundle of debts, they rarely have all of this information. And… they KNOW they are not legally allowed to pursue collection until they do. They just get away with it because there is not sufficient oversight.
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Limit excessive or disruptive communications
Collectors would be limited to six communication attempts per week cumulatively through any point of contact before they have reached the consumer. Plus, if you want to stop specific methods of contact (like calls at work or on your cell phone), or calls during certain hours of the day, these new regulations would make that easier.
The CFPB is also considering a 30-day ban on calls after a consumer passes away to protect surviving spouses and other relatives. A little human decency would be nice…
Make debt details clear and disputes easy
Collectors would be required to include more specific information about the debt in the initial collection notices sent to consumers, including a detailed explanation of your federal consumer rights and a clear disclosure if your debt is too old for a lawsuit.
The proposal would also add a “tear-off” portion to the notice that consumers could send back to the collector to easily dispute the debt, with options for why the consumer thinks the collector’s demand is wrong.
Document the debt on demand for disputes
If the tear-off sheet or any written communication is sent back to the collector by the consumer within 30 days of the initial collection notice, the collector would have to provide a detailed debt report back to the consumer. More importantly, the collector could not continue to pursue the debt until that report and verification is sent.
Stop “burying” the dispute
Debt collectors buy and sell debts to one another all the time. In fact, it is a favorite tactic to give consumers the runaround when they are actively disputing a debt. Under these new regulations, if a debt collector transfers a debt to another collector without adequately responding to disputes, the next collector could not try to collect until the original dispute is resolved. And, all dispute information would have to be transferred to the new collection company along with the debt, saving the consumer from having to resubmit their dispute information to the new collector.
And here’s the biggie…
Stop collecting or suing for a debt without proper documentation
If a consumer disputes – in any way – the validity of the debt, collectors would have to stop all collection attepts until the necessary documentation is acquired. Collecting on a debt that lacks sufficient evidence would be prohibited. In other words, unless the collection company verifies the debt completely (including the dollar amounts for principle, interest, and fees)… They. Cannot. Collect.
Big win for consumers!
Now… let’s pray these regulations are enforced.
Put some pressure on the CFPB to pass these regulations. Call them at (855) 411-2372 to voice your opinion. Visit http://www.consumerfinance.gov/complaint/ to file a complaint against an aggressive or non-compliant debt collection company.
We will watch the news feeds and let you know when (and if) these regulations go into effect.
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If you have any questions, please give us a call at 770-952-5168 or contact us online.
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Other articles that may interest you:
10 Things to Do When a Debt Collector Calls
5 Facts Debt Collectors Don’t Want You To Know
Checklist: Is a Debt Collector Violating Your Rights?
This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.