Consumers facing increasing delinquencies are also facing more aggressive debt collection procedures. Anyone who has had to deal with professional debt collectors knows they can be ruthless at times.
Because of this ruthlessness the US Congress passed national consumer credit laws that limited the actions of debt collectors. For example, before the national law, collectors were calling consumers all hours of the day and night…the middle of the night included. The collectors would even call family and friends trying to get them to put pressure on the debtors. It is quite possible the collection agencies also hoped these same family and friends might help pay the debt!
The national laws put limits on these kinds of activities. For example, it is illegal for a debt collector to call before 8 AM. There are many other restrictions included too such as making debtor harassment illegal. Debt collectors are no longer allowed to lie to debtors to scare them and are only supposed to tell the absolute truth. There are many limits in place as to where they can contact the debtors too.
But everyone knows passing a law doesn’t necessarily correct bad behavior! As loan delinquencies rise as a result of the recession, so have debt collection efforts and many are once again too aggressive.
As a result some states are making even stricter laws concerning consumer debt collection. These laws address both current actual collection efforts and increase the number of illegal activities punishable by law. There are six states so far that have strengthened debt collection laws and many more are in the process of doing the same thing.
You should check your state government website for news concerning state laws on debt collection.
For example, in North Carolina there is now a state law that requires debt collectors to be able to prove the debt is owed by the consumer. Other states are passing similar laws. What many people don’t realize is that their delinquent loans are often sold to other companies for a lesser amount than the debt itself. These debt buyers make their money by trying to collect more than they paid for the debt. Pennies on the dollar are paid for these loans and many have already been labeled as uncollectible.
Obviously these debt collectors are going to be aggressive but their behavior can go beyond what is considered to be decent. Consumers have reported debt collectors using foul language or continuing collect bills that consumers have already paid or on accounts that have already been proven to be uncollectible. The new stricter state laws will make put the onus of proof on the debt collector to prove the money is legally owed to the collecting company. Documentation of the history of the debt will have to be produced.
It should be understood that any consumer incurring a legal debt has a responsibility to pay that debt. These new debt collection laws are not intended to help people avoid owing what they owe. Naturally, the debt collection companies object to these laws. But the issues in this case are concerned with how debt is collected. It seems that if the government doesn’t put legal penalties in place for unfair debt collection practices there are many unscrupulous collectors who will go too far.
It is “what is too far” that remains a point of contention between debt collectors and consumers.
As unemployment continues to increase, loan delinquencies will too. Consumers choosing to pay a mortgage payment or a credit card payment will often choose the house payment of course. In many cases it is neither debt that gets paid.
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