One of the most prevalent problems with debt collection is harassing communications from debt collectors that violate consumers’ privacy and can cause serious harm to individuals and their families. In the Consumer Bureau’s survey on debt collection experiences, 42% of consumers who had been contacted by a collector in the past year reported that they had asked the collector to stop contacting them. More than a third of consumers were called four or more times a week and nearly one in five were contacted eight or more times a week. Even worse, 75% of consumers who asked to stop receiving calls...
More than 4 million Americans are subject to wage garnishments for outstanding consumer debts and over 64 million people are being pursued by debt collectors, making them vulnerable to being sued for the wrong debt or the wrong amount of debt, among other predatory debt collection practices. People of color are more likely to be contacted by collectors and to be impacted by lawsuits resulting in wage garnishment and bank levies. CRL advocates for the protection of $1,000 per week in take home pay from wage garnishment and works to expose abusive debt collection and settlement practices.
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In recent decades, an increase in consumer debt has led to substantial growth in the debt collection industry as Americans struggled to pay down their debts. A subset of the debt collection industry, debt buyers, emerged in the wake of this growth in consumer debt. Debt buyers purchase debts from lenders and other creditors at a steep discount and then attempt to collect the debt themselves, often without the underlying documentation of the debt. With the advent and growth of debt buyers has come an increase in the use of litigation to collect debts. Because of their use of the court system to...
CRL Director of Federal Advocacy, Scott Astrada, appeared before the HFSC's Financial Institutions and Consumer Credit Subcommittee on January 9th, 2018 to deliver testimony for a hearing tittled "Legislative Proposals for a More Efficient Federal Financial Regulatory Regime: Part III." He spoke on the following bills: H.R. 2683, a bill to prevent veterans' credit scores from unfairly being hurt by inaccurately reported medical debts. CRL supports supports the bill and views it as a positive step forward to protect veterans from credit reporting errors. We further encourage Congress to...
With little difference across party lines, Coloradoans expressed their strong support for a proposal requiring debt buyers, companies that buy old debts and attempt to collect on them, provide appropriate documentation for the debts they collect and sue on. Survey respondents were asked this question: Would you support or oppose a law requiring debt buyers to provide documentation to the consumer and the court showing how much is owed, a copy of the contract and proof that they actually own the debt? Nearly nine out of ten voters—87%—said they would support the proposal. While 90% of Democrats...
Six years after the Great Recession, American households continue to struggle with consumer debt. According to data reported by the Urban Institute, approximately 77 million Americans – 35 percent of adults with credit files – have debt in collections reported on their credit files. These Americans carry about $1,349 in debt. About 31 percent of Colorado residents have debt in collections. Debt buyers purchase bad debts that were written off by the original creditor. They pay pennies on the dollar and try to collect the full amount. But they have so little information about the underlying...
This analysis provides a summary of the outline of proposals that the CFPB is considering to address debt collection and CRL’s initial reactions to it. As we review the proposal more closely, our reactions may evolve.
The undersigned consumer protection, civil rights, and legal services groups write to express our significant concerns with the outline of proposed regulations on debt collection issued by the Consumer Financial Protection Bureau on July 28, 2016. The proposal represents a missed opportunity to fundamentally improve protections for consumers victimized by predatory debt collection practices. Some of the proposed changes will address certain debt collector conduct that hurts consumers. For example, we support the CFPB’s proposal to: Require the transfer of information from prior attempts to...
Prepared Remarks of Graciela Aponte-Diaz Before the CFPB Field Hearing on Debt Collection, July 2016
Read Graciela Aponte-Diaz's remarks before the July 2016 CFPB Field Hearing on Debt Collection. The unfair and abusive practices of debt collection in the market can take advantage of financially-distressed consumers or unfairly strip families of wealth. The Great Recession made this financial distress inevitable for many U.S. households. Each year, tens of millions of Americans are pursued by creditors, debt collectors, debt buyers, or attorneys for an overdue bill. And while debt collection plays a role in our economy, it may also expose U.S. households to unnecessary abuses. Debt collection...
Debt buyers, specialized debt-collection companies, purchase defaulted consumer debt from creditors such as credit card companies for pennies on the dollar. Debt buyers then attempt to collect the debt, often by suing borrowers in court. Unfortunately, because debts are typically sold to debt buyers without fully verifying the accuracy of the borrower's identity, amount of the debt, or status of repayment, the information used as a basis to collect from consumers may be faulty. As a consequence, borrowers can find themselves facing a default judgment from court on a debt that they do not in...
Unfair debt collection practices, particularly those of debt buyers, undermine individuals' financial security, especially among low-income households and households of color. When people are pursued or sued for debt they do not owe, these unfair collection attempts not only threaten the unnecessary extraction of money from individuals, but also hinder opportunities to build assets for the future. Towards this end, strong, effective rules to prevent unfair practices can help keep hard earned wages in consumers’ pockets and build pathways to financial security. In this comment regarding the...