CFPB to Push for an Overhaul of the Debt Collection Industry

Posted on August 10, 2016 at 12:00pm by
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If you are receiving constant phone calls for past due medical bills or other debts, it may interest you to continue reading. The Consumer Financial Protection Bureau (CFPB) is pushing for an overhaul of the debt collection industry that could end abusive practices carried out by third-party collectors.

Third-party collectors are the ones who buy debts in massive datasets (containing information on tens of thousands of consumers) for pennies on the dollar. First-party collectors are generally subsidiaries of companies collecting past-due debts.

According to the CFPB, new rules are needed to improve accuracy and accountability within the debt collection industry.

How the New CFPB Rules Would Prevent Debt Collector Abuses

If you are being pestered by third-party collectors, here are four ways the new rules could affect you.

Prove the debts belong to you: Collectors would be required to prove the past-due debts in question belong to you. Information such as your full name, last known address, telephone numbers, account numbers, date of default or amount owed would have to be correct before collectors could contact you asking for payments.

Limits on communication: Under the new rules, collectors would be limited to contacting you six times per week. If you had a spouse or parent recently pass away, debt collectors would be unable to call asking about debts for 30 days. In addition, you could also ask for debt collectors to cease contacting you at specific numbers or during specific times.

More tools for debt disputes: Collectors will be required to include helpful information about past due debts when mailing you notices. This information would include your federal rights under the Fair Debt Collection Practices Act. Notices will also include a ‘tear off portion’ that you could fill out and mail back to dispute debts. You could also challenge debts verbally over the phone. Either method would require collectors to cease all communication and prove in writing the past due debts belong to you.

Transferring debts: If collectors transfer debts to other agencies before responding to your dispute, the next collection agency would still be barred from contacting you. Your original dispute must be resolved by the new collector before they can contact you. In addition, you would not have to resubmit your dispute to the new collector.

If these new rules go into effect, it will have a substantial impact on the debt collection industry. In fact, these are the biggest changes to the industry since the Fair Debt Collection Practices Act went into law in 1977.

The Kansas City bankruptcy attorneys at The Sader Law Firm can help struggling borrowers find solutions for managing past due debts.