How changes in debt collection laws affect consumers
The changes in debt collection laws have something in store for debtors (consumers).
Have a look below and get a clear idea of your rights.
Changes in debt collection laws
On Thursday 28th July 2016, the Consumer Financial Protection Bureau (CFPB) has proposed regulations to debt collection practices. The changes are as follows:
- Debt collectors must provide full documentation of the debt before collecting.
- Limitations regarding the number of time a debt collector may contact a debtor.
- Debt collectors must provide information to a consumer regarding consumer's rights.
- Rules for calling debtors regarding old debts.
Now, let's’ learn about the proposed changes in details:
1 Provide full documentation of the debt before collecting
Debt collectors have to prove that the debt they’re trying to collect belongs to the individual they’re collecting the debt from. In short, they’ve to provide full documentation of the debt they’re collecting.
This would help debt collectors from contacting the wrong person due to lack of correct information. Also, it would keep a check on debt collectors who contact the wrong person knowingly.
2 Controlling the debt collection call
Under the prevailing debt collection laws, debt collectors can call, text, and email the debtor N number of times. But, the newly proposed debt collection laws restrict the number of times debt collectors can contact debtor.
3 Can’t sue debtor after the debt has crossed the Statute of Limitations period
Under new debt collection rules, debt collectors are prohibited from suing the debtor for the debt that has crossed the Statute of Limitations (SOL) period. Moreover, debt collectors have to reveal whether or not they’re contacting about an old debt on which the SOL has expired.
If the SOL on the debt has expired, debt collectors have to notify the debtor about it and also inform the debtor that he/she cannot be sued for it.
4 Provide information to consumer regarding consumer’s rights
When debt collectors contact debtors (consumers), they’ve to give full information regarding consumer’s rights to them. So that, consumers don’t fall prey to the abusive debt collection practices.
Effects of debt collection laws
Now that you know the proposed changes in the debt collection laws, let’s find out how these affect debtors:
1 Avoiding legal hassles due to improper documentation
When your debt is sold multiple times, debt buyers lower on the collection chain doesn’t have full documentation of the debt.
This law prohibits debt collectors from collecting the debt if it lacks proper documentation. So, consumers have to provide full information of the debt if contacted by subsequent debt buyers.
2 Original records of the consumer will be focused
A debtor’s original documents (like payment and billing information, and contracts and leases, and so on) will be under the spotlight of many legislative bodies. So, consumers must retain all information for at least 7 years.
3 Limitation on excessive or needless communication
Consumers will be saved from answering endless collection calls since it has been reduced to 6 calls per week. Thus, debtors will get with a breathing space.
Moreover, if debtors want to stop the ways debt collectors are contacting them (like contacting them at work), they can do that. If a consumer expires, debt collectors can’t contact his/her family members like surviving spouse for sometime, which is known as the 30-day waiting period.
4 Making disputes easy
Debtors will be saved from being sued by debt collectors if the SOL on debt has expired. However, collectors should send all the details of the debt to the consumer in the initial collection notices. They should also provide proper information about consumer’s federal rights to the debtor.
5 Collection of correct debt
The changes in the debt collection laws would help debt collectors collect the correct debt. They need to provide and verify every details of the debt before contacting the debtor. It would also prohibit collectors from collecting the wrong debt knowingly.
Consumers should stay true to their debts and provide details of their debts to collectors. This would help them tackle legal hassles with ease. If disturbed by debt collectors, consumers must contact CFPB for help.