On July 28, 2016 the Consumer Financial Protection Bureau (CFPB), the arm of the federal government responsible for consumer’s rights, issued an outline of proposals that would result in major changes to the debt collection process if accepted.
Documentation and Proof of Debt Requirements
Often correspondence received by borrowers is not even from the original creditor. Collection agencies routinely purchase debt at a fraction of the amount owed and begin collecting on the debt through phone calls and mailings. The CFPB proposals make it more difficult for the collectors by requiring documentation to prove the debt is still owed by the individual they are contacting. They must provide details such as the borrower’s complete contact information and specifically when the debt went to collections and the payment history. Further, these collectors cannot file suit until evidence is given that shows “the evidence of the amount of principal, interest, or fees billed, and the date of each payment made after default.”
Right to Dispute Debt
The CFPB makes it easier for borrowers to contest the collection notices by not having to jump through hoops to contact the collector. The proposal requires the collectors to provide a form that the borrower can fill out to dispute a debt. If the borrower disputes the debt, the burden of proof shifts to the collector to prove that the borrower is incorrect on his dispute.
At times borrowers get collection notices on debt that is so old that the statute of limitations has expired for a lawsuit on the debt. For this type of debt, the CFPB has proposed that that the collector must indicate that the debt is “too old for a lawsuit” in their correspondence. Further, the collector is not allowed to take the borrower to court on the old debt.
Limitation on Contact
The CFPB proposes that the collector can only contact borrowers six times a week in any form of correspondence, including phone calls, regardless if picked up, mailings, and emails. After initial contact is made, the collector is only allowed one additional contact per week with no more than three attempts. At any point, if the borrower requests that they not be contacted, the collector must cease and is prevented from making further contact.
Although these proposals have not been accepted, it is good news for borrowers who are facing a barrage of phone calls and are confused about what entity they owe and for how much.
If you are experiencing debt collection that is against the law or are overwhelmed, contact an experienced debt professional at (248) 237-7979.