Consumers with financial problems often feel overwhelmed by the pressure of finding money to get by each day. That is on top of dealing with aggressive companies working on debt collection. Fortunately, there are advocates for consumer rights at all levels working to ensure fairness when dealing with lenders and creditors.
For example, the Consumer Financial Protection Bureau (CFPB) is a new agency created by the 2010 Dodd-Frank Act aimed at helping consumers. The agency has a wide mission, with one task: ensuring that debt collectors follow existing law, particularly the Fair Debt Collection Practices Act. To help with that mission, the agency recently assigned internal examiners to analyze every aspect of the debt collection business, including the ways they are contacting consumers.
Proposed Rule Changes
Last month the CFPB issued “clarifications” on new federal regulations related to debt collection contact with potentially delinquent borrowers. The new rules are myriad, but of direct interest to those contemplating bankruptcy, the regulations will require lenders to provide more information to borrowers when making collection calls. The rules are slightly different for consumers who are in the middle of the bankruptcy process, making it critical to speak with your bankruptcy attorney when contacted by a creditor.
Per a bulletin issued by the CFPB, the proposed new rules include one very complex new servicing protocol connected to the the bankruptcy code and the Fair Debt Collection Practices Act (FDCPA).
Specifically, after the changes, a delinquent but non-bankrupt borrower who has requested not to be contacted by a lender must still receive certain notices and communications from the lender. However, this changes after a bankruptcy filing. After bankruptcy, servicers are exempted from many CFPB requirements to provide periodic account statements and certain early intervention contacts.
Aggressive Debt Collectors
As many know first-hand, debt collection companies are no strangers to using harassing and aggressive tactics in an attempt to receive payment. This does not mean that debt collectors are unable to make calls, send letters, or otherwise try to reach borrowers to discuss the situation. But at all times the communication needs to be “reasonable.’ The bulletin issued by the CFPB offers some general examples of what is or is not “reasonable” as contemplated under the FDCPA. The same standards apply in regards to lenders making attempts to provide borrowers with helpful information about possible mitigation options. In other words, while the law requires lenders to provide certain information to borrowers, it is unacceptable for lenders to simply make one call or send one letter and assume their obligation is met. Real contact with borrowers and an honest exchange of information is likely needed.
To help combat the problem of unreasonable debt collector action, the CFPB recently announced the creation of a consumer response system. Under the new protocols, borrowers who are victimized by overly aggressive debt collection practices–like threats of jail or social media postings–can report the problem to regulators. The hope is that this reporting will allow officials to target companies with a track record of skirting the law and take steps to ensure punishment. If you have been affected in this way, feel free to visit the CFPB response system website to file a complaint or speak with a consumer rights lawyer.