Governor Signs Bill That Holds Debt Collectors to Stricter Standards

July 12, 2013
Visalia Times-Delta 
debt settlement news

California Gov. Jerry Brown has signed legislation that gets tough on debt collection scams and cracks down on companies that try to get consumers to pay bills they may never have owed. The Fair Debt Buyers Practices Act forbids a collector from bringing a lawsuit or collecting a debt unless it can verify the debt's ownership and amount. The new law also ends litigation on uncollected debts barred by the statute of limitations. The bill specifically targets firms that purchase debt that may have gone through several collection agencies; state and federal regulators say that some of these debt buyers break the law to try to earn a profit. Complaints against debt buyers make up about 25 percent of all grievances to federal authorities; and there are nearly 103,000 federal cases pending against such firms, says Christopher Koegel, the Federal Trade Commission's assistant director of Division of Financial Practices. Many companies allegedly threaten debtors with jail time, call them repeatedly, or fail to confirm basic facts about the debt in question before filing a lawsuit. Up to 95 percent of these cases end in default judgment because consumers do not respond, often because they never received notice of a lawsuit. The new California law requires debt buyers to direct their collection efforts at the proper debtor for the right amount, rather than using “robo signers” that mass-produce affidavits attesting that they have reviewed debt records for their validity.
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