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Government report paints grim picture of debt collection

On Behalf of | Jan 17, 2017 | Bankruptcy

Debt collection around the country has grown into a $13.7 billion per year industry, but a report from the Consumer Financial Protection Bureau reveals that many of the nation’s debt collectors routinely ignore regulations that have been put in place to protect consumers in Virginia and elsewhere from harassment and abuse. The findings contained in the CFPB report, which was released on Jan. 12, are based on more than 2,000 surveys returned to the agency by American consumers.

A federal regulation requires debt collection agencies to call consumers no earlier than 8:00 a.m. and no later than 9:00 p.m., but about a third of the CFPB survey respondents said that this rule was largely ignored. Debt collectors are also supposed to stop making calls after being asked to do so in writing, but the survey responses indicate that only about a quarter of such requests are actually honored.

The CFPB report also reveals that debt collection companies do very little data checking before the calls begin. More than half of the consumers who returned surveys said that the people they spoke with were either calling about somebody else’s debt or had inaccurate figures. Proposed regulatory changes would prevent debt collectors from calling the family members of deceased debtors for 30 days and place a weekly limit on debt collection calls.

People who are seeking relief from overwhelming debt are sometimes reluctant to take action because of the many myths surrounding personal bankruptcy. Attorneys with debt relief experience could explain that a Chapter 7 or Chapter 13 personal bankruptcy filing provides those struggling to make ends meet with the possibility of a financial fresh start. They may also point out that filing for bankruptcy puts at least a temporary end to creditor contact.