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Debt collectors under scrutiny from consumer protection agency

Regulators at the Consumer Financial Protection Bureau have released information about some proposed new limits on debt collection practices. The new limits are still about a year away from becoming law, but the proposals signal action on the increasing problem of aggressive and unfair debt collection practices that impact so many Americans. In fact, one in ten Americans hold past-due debt at an average amount of $1,400.

The new regulations will take aim at issues like accuracy of debt collector’s records, particularly when it comes to debt-buying companies that purchase overdue debt from the business that made the original loan.

Many of the concerns that are now being voiced about the debt collection industry sound familiar because the issues are similar to those in the foreclosure industry. Most notably are issues with generic court filings and cases that haven’t been reviewed or that don’t have specific documentation to support them. In the case of foreclosures this came in the form of “robo-signing” in which foreclosure filings were never reviewed by a person for accuracy. This resulted in homeowners who were not behind on their payment or who had renegotiated a new payment plan being foreclosed on. Similarly, generic filings for past-due debt collections can lead to unfair wage garnishment or damage to someone’s credit score without justification.

Borrowers who are faced with mounting debt and the stress of aggressive collections do have options even while new regulations are still pending. Whether that means pursuing a renegotiation of debts or declaring bankruptcy to stop collections or another route, consulting an experienced debt relief attorney can help individuals figure out what their best option is.

Source: Washington Post, “Debt collectors face new rules under proposal from Consumer Financial Protection Bureau,” Danielle Douglas, Nov. 5, 2013. 

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