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Prohibit Unfair Debt Collection Activities in Missouri

Thursday, February 25, 2016
Diane Standaert

Missouri Attorney General should move to prohibit suing, collecting, or attempting to collect zombie debts.

Jefferson City, MO – The Center for Responsible Lending (CRL) submitted to the Missouri Attorney General, comments to strengthen proposed reforms aimed to curb predatory debt-collection practices. In its comment, CRL submitted background on debt-collection abuses and provided recommendations to prevent the unfair collection of zombie debts, additional unfair collection activities, and unfair accrual of interest above the usury limit.

Unfair debt-collection practices undermine financial security, especially in low-income communities and households of color, hindering opportunities to build assets. Debt-collection abuses are widespread and well-documented. Communities of color are disproportionally affected by collection lawsuits, perpetuating the already wide racial wealth gap.

As federal and state regulators look for ways to rein in predatory debt-collection practices remain a central concern. Certain companies purchase delinquent debt from credit card companies and other creditors for pennies on the dollar. They then collect the debt themselves or through collection agencies or law firms.

When debt is sold, it rarely comes with proper documentation. The account information passed on is often incomplete, inaccurate or outdated, particularly, if the debt is resold multiple times. As a result, consumers are often wrongly harassed and sued. “Missourians, like people across the country, are being sued for old debts without their knowledge and often with little proof of the claims,” said Diane Standaert, Director of State Policy at CRL. “Collectors and creditors take advantage of distressed consumers and overwhelm state court systems, extracting billions of dollars in judgments nationwide for debts that may not even be owed.”

In addition to the federal and state enforcement actions, a number of state courts and legislatures have taken steps in recent years to prohibit the practice of suing, collecting, or attempting to collect on debt beyond the statute of limitations. In submitting its comments, the Center for Responsible Lending supports efforts to prevent unfair debt-collection practices, while also urging improvements to the proposal to ensure it is effective and does not codify existing harmful practices.

For more information, or to arrange an interview with a CRL expert, please contact Diane Standaert at diane.standaert@responsiblelending.org or 919.313.8550