The U.S. Congress has finally realized what consumers have known for a very long time – that debt collectors are preying on the unknowledgeable and the unsophisticated – and our lawmakers have decided to do something about it. In particular, the Dodd-Frank Act – known officially as the Fair Debt Collection Practices Act (FDCPA) – authorizes the Consumer Financial Protection Bureau (CFPB) to supervise the actions of these “non-bank entities” that provide certain consumer products and services.
Here are some of the new rule changes that should make life easier for those struggling under an unmanageable debt load:
Elimination of Excessive or Inconveniently Timed Phone Calls – In the past, debt collectors have used the unsavory tactic of calling at all hours of the night and using robocallers to harass. The new provisions within the FDCPA require that debt collectors only call within certain prescribed hours.
No More Misleading Representations – Collection agencies must now also provide significant and reliable documentation that a debt actually exists. For instance, they can no longer claim that the children of deceased parents are obligated to pay a debt if no estate exists.
Prohibition of False Threats of Litigation – Litigation is an expensive process and debt collectors and understandably hesitant to pursue this course of action for a relatively minor debt. Still, it was routine for them to threaten the action – this is no longer legal under the new FDCPA rules.
Tightened Rules on 3rd Party Disclosure – Debt collectors were notorious for disclosing the debtors information to uninterested and unwarranted entities such as relatives, friends and employers causing humiliation to the debtor. The latest provisions of the FDCPA have increased the stringency of the rules for doing so and – more importantly – the penalties for failure to comply.
Debt collection is a huge business – estimates of its size ranging up to $13B, so it is unlikely to go anywhere soon. Still, better regulation means a fairer outcome for those with any amount of debt but especially for those who are buried. For further information on this and other debt counseling topics, please contact us at Superior Debt Relief.