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Major Changes Coming to Debt Collection Market? CFPB Proposes Overhaul

July 28th, 2016 · No Comments · Debt Collection

by Kristy Welsh

(Last Updated On: November 10, 2017)

Major Changes Coming to Debt Collection Market CFPB Proposes Overhaul

Owing debt is stressful enough without debt collectors making it worse. We already have a debt validation process and laws against harassment, but the Consumer Financial Protection Bureau (CFPB) says we can do better. Thus, the proposed changes that overhaul the debt collection market.

Proposed Changes to Debt Collection Market

No collecting until the debt is verified

Before trying to collect a dime from you, debt collectors would be required to confirm your:

  • Full name
  • Last known address
  • Last known phone number
  • Account number
  • Date of default
  • Amount owed
  • Date and amount of any payment made since the default

No more than 6 points of contact per week

That’s attempted contact, by the way. If you don’t answer the phone 6 times in a week, they have to wait until the next week to try again. It would also be made easier for you to stop attempted contact at your place of work or during specific hours of the day.

More details provided in the initial collection notice

When a debt collector makes initial contact with you, they would be required to provide you with more detailed information about the debt, including a copy of your federal rights and whether the debt is too old for the debt collector to sue you over.

Easier dispute process

The initial collection notice would have to include a tear-off portion so that you can easily and immediately dispute the debt. This tear-off section would include options for you to check relative to why you believe the collection attempt is in error. Provided you send back the dispute within 30 days of the initial notice, the debt collector would be required to respond with a report that confirms the accuracy of the debt.

No more collection activity until the debt is verified

Once you dispute a debt, the debt collector would not be allowed to continue collection activity until providing verification of its accuracy. Debt collectors would also be required to thoroughly investigate a debt before taking you to court. That means making sure they have verified the amount of principal, interest, and fees bills, as well as the date and amount of any payment made after default.

No more burying disputes

This is a shady practice that enables debt collectors to dodge disputes by selling the account to a new debt collector. Under the proposed changes, the dispute information would need to be transferred to the new owner of the debt. And that new debt collector would be prohibited from trying to collect on it until the dispute is resolved.

To learn more about why the CFPB believes these changes are so important, check out the agency’s Study of Third-Party Debt Collection Operations.

Debt Collector After You?

You don’t have to wait on these proposed changes to make sure you’re protected from debt collectors. You have rights today – make sure you know them.

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