Reforms Could Revamp U.S. Debt Collection System
A number of proposed reforms involving the U.S. debt-collection system may result in an ever-watchful eye on debt collectors from the federal government.
Roughly 77 million people have unpaid bills, and the multi-billion dollar debt collection industry works to collect this money. The Consumer Financial Protection Bureau said its practice is controversial with thousands of consumers complaining every month.
The agency went after two well-known debt collection companies last year that allegedly threatened and deceived consumers to collect debts despite knowing they were not correct or had other issues. Between both companies, the damages totaled $18 million.
If the proposed reforms were to pass, debt collectors would have to verify the debt before they contacted the consumer – confirmation of full names and debts were not already paid off. They also would need to let consumers clearly know how they dispute the debts.
Collectors would also be required to limit the number of times they contact debtors to around six times a week – missed calls and voicemails. The proposal also said debt collectors would have to wait 30 days before they contacted a deceased person’s family members.
While the reforms are considered the “step in the right direction,” an ACA International spokeswoman said it could make it difficult for poor folks to get loans credit later on. If creditors can’t collect debts that are rightfully owned, they may not feel inclined to offer credit to consumers who need it to purchase goods and services.
Shelia Dewan said credit is an important aspect to all parts of life including jobs. Many job applicants have their credits checked to determine trustworthiness and responsibility. Dewan said the poor tend to have a harder time saving money, which is why they can use the credit to control their finances.
A panel of small business owners will review the reforms before they become official. If approved, they would go into effect in September 2018.