New Rules May Offer You More Protection Against Debt Collectors
Dealing with debt collectors can be a real drag, especially if theyâre constantly hounding you to pay up. The Fair Debt Collection Practices Act (FDCPA) protects consumers against harassment from debt collectors but the industry still generates millions of complaints each year. Fortunately, the Consumer Financial Protection Bureau (CFPB) has proposed new guidelines that shield debtors from abusive debt collection efforts.
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The Proposed Rules
In July, the CFPB proposed a new set of rules aiming to completely revamp the debt collection market. The proposal is focused primarily on doing two things: limiting contact between debt collectors and consumers and making sure that collection agencies have accurate information before they try to collect on a debt.
The proposed rules are meant to alleviate some of the problems associated with the debt collection industry, which affects about 70 million Americans. Essentially, the CFPB wants to increase transparency and cut down on errors and inaccuracies. The agencyâs proposed rules would require debt collectors to do the following:
- Verify that theyâre collecting the right debt. Debt collectors would need to make sure that theyâre targeting the right person before trying to collect a debt. Specifically, theyâd have to verify the debtorâs name, address, phone number, account number, date of default and the amount of debt thatâs owed.
- Limit how often they contact consumers. Instead of calling debtors repeatedly or flooding their mailboxes with letters, debt collectors would be limited to contacting them six times per week.
- Simplify the dispute process. Consumers have the right to dispute a debt but the CFPB wants to take things one step further. Debt collectors would have to give as much information as possible about debts when sending out written collection notices. Theyâd have to include a form that consumers could mail in to dispute their debt.
- Provide written verification. If a consumer mails in the form to dispute a debt, the debt collector would have to mail them a written debt report. The collection agency would be barred from pursuing the debt without sending out a report.
- Review documentation of debts before trying to collect. Debt collectors wouldnât be able to collect anything until theyâve reviewed the documents related to the debt. If a collector wanted to sue someone, theyâd need sufficient evidence and documentation of the debt.
- Notify other debt collectors of disputes. If a debt collector sells your debt to another collection agency after youâve disputed it, the new collector wouldnât be able to come after you before resolving the dispute.
Related Article: The Worst Ways to Deal With a Bill Collector
When Would the New Rules Go Into Effect?
The proposed rules need to be reviewed by small business leaders and industry experts before they can be implemented. But if the CFPB successfully pushes them through, they could go into effect in 2017. In the meantime, youâre still covered by the FDCPA.
In case youâre not sure what your rights are, hereâs a quick rundown of what debt collectors canât do:
- They canât make false statements. A debt collector canât give out false information about the amount of debt you owe or say that youâve broken the law by falling behind on debt payments.
- They canât use unfair practices to collect. Debt collectors canât try to garnish certain assets in order to cover your debts. For example, they canât take a portion of your Social Security benefits, your workersâ compensation benefits or your Supplemental Security Income.
- They canât harass you. Debt collectors canât threaten you or be verbally abusive. They canât use profane or obscene language or call you repeatedly just to annoy you.
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There is some opposition to the CFPBâs proposals. So weâll have to wait and see what happens. In the meantime, if a debt collector has been hounding you or your feel that your rights have been violated, you can file a complaint with the Consumer Financial Protection Bureau.
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