Updates for Debt Collection Laws

Dodgy Debt Collectors

Dodgy Debt Collectors

For many consumers, being in debt is a shameful experience. They are hesitant to tell friends and family because they think it’s a sign they aren’t managing their life well or aren’t in a successful position.

To make matters worse, once a person is in a substantial amount of debt that cannot service, debt collectors can start harassing them. Many debt collectors can be rude and make threatening phone calls – they just want the money as soon as possible and have no concern about how it impacts the person in debt.

It’s not a very nice experience and some people in debt feel very degraded after encountering a debt collector. Debt collectors remain one of the major sources of complaints from consumers and various organizations are pushing for reform in the sector.

One of those organizations is the federal Consumer Financial Protection Bureau (CFPB) who have been working on a set of new rules for debt collection that protects consumers.

Love Inc a non-profit that helps families on low income dealing with debt. The executive director Elizabeth Benefiel says of current debt collection practices: “Just because they got into debt doesn’t mean they deserve to be abused and harassed”

Currently debt collectors make up more than 10% of all consumer complaints, an astonishing figure. In the space of a year the CFPB received more than 11’000 complaints about debt collectors. If that many people are complaining about their experience with debt collectors, how many more are being affected and not complaining?

Alma Zuniga, a lawyer working for another non-profit, the “Northwest Justice Project”, says: “There’s a lot of people who don’t call. I don’t think that’s an accurate number of problems people have.”

Most of the complaints are about debt collection agencies that have bought debt from banks and other financial institutions and are aggressively pursuing it. Some of these debt collection companies have bought the debt for incredibly low rates because the financial institutions have given up on recovering it.

Quite often the debt collectors end up looking to retrieve debts from the wrong person! It’s one of the reasons that if an aggressive debt collector shows up demanding money you should take a close look at the documentation to make sure the debt is actually yours at all. If they don’t have complete information about the nature and origin of the debt as well as your link to it, never pay anything.

Some debt collectors also make illegitimate threats such as risk of imprisonment if you don’t pay the debt. One of the most common sources of complaint is from people who have been threatened with all kinds of penalties by a debt collector.

Debt collection firms suggest that the level of complaints about debt collection practices are only a small number given the amount of debt collection going on. According to them, most companies in the sector are operating ethically and just a small number of bad debt collection companies are responsible for many of the complaints.

Some of the non-profit organizations concerned about dodgy debt collectors want more police monitoring the activities of the debt collection sector. So people who are affected can contact the police and have a specialist unit with experience look into it.

The Consumer Financial Protection Bureau continues to work towards a revamp of debt collection practice rules which provide more protection against dodgy debt collectors.

Some of the reforms considered include prohibiting debt collectors from buying debts without verifiable records, which would help prevent some of the cases of the wrong people being harassed by debt collectors.

Another reform is a crack down on the massive amount of harassing and abusive phone calls that are made to people in debt.

Even with these simple reforms, the majority of complaints about debt collection agencies could be rectified.

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