New debt collection rules have been proposed by the Consumer Financial Protection Bureau (the CFPB), which is the governmental agency in charge of making these rules after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. If enacted, these rules would result in much needed changes to the debt collection industry, and possibly help people avoid debt relief through bankruptcy.
For example, debt buyers/collectors would: have to demonstrate they verified the debt before starting collection action; include more information about the debt in the initial communications to better able the debtor to identify the debt; limit excessive communications; and have to stop debt collection efforts if there is insufficient documentation to support the debt.
The debt collection industry has exploded (for a humorous, but sobering look at how the industry works check out John Oliver’s piece from his HBO program), and often times the legal formalities are sidelined in favor of expediency in the court process. An untold number of debts are alleged without any documentation to support the balance or even without a contract, and some debts are sold and collected without any demonstration that the legal requirements of “ownership” of the debt are satisfied. It often becomes more cost effective to simply file for debt relief through bankruptcy than to pay to fight these debts…hopefully these rules will start to level the playing field.
If you are harassed by a debt collector seeking to collect a debt that does not appear to be valid, or if a debt collector does not comply with the law, you are encouraged to file a consumer complaint with the Consumer Financial Protection Bureau. These proposed rules are a direct result of thousands of consumer complaints, which means these problems are pervasive in the debt collection industry