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Debt-Collection Reforms Protect Consumers and Credit Access

Monday, April 4, 2016

Study confirms urgent need to curtail debt-collection abuses

Washington, DC – New research from the Center for Responsible Lending (CRL) shows that strong debt-collection reforms do not restrict credit availability. Despite claims from the debt-collection industry, CRL analysis of data from North Carolina and Maryland – two states with recent debt-collection reforms – establishes that there was no sign of any negative impact to consumer credit.

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. Many debt-collection abuses are concentrated among those collectors that purchase old debts for pennies on the dollar, or debt buyers, and then harass or sue people for debt that may not even be owed.

As states across the country seek to advance reforms to ensure that debt collectors are pursuing only the right people for the right debt, debt collectors attempt to block these reforms by claiming that these reforms will reduce access to credit. As such, today’s report assesses that claim by analyzing data from two states that are among the strongest examples of states acting to protect consumers from unfair debt-collection practices – North Carolina and Maryland.

Key findings include:

  • Credit availability is not restricted due to debt-collection reforms, even for those consumers with non-prime credit scores.
  • Consumers in states with reforms fared better than those in peer states without reforms.

"CRL findings confirm the need for states to address unfair abusive debt-collection litigation practices that undermine the financial security of their citizens and overwhelm state court systems," said Lisa Stifler, Senior Policy Counsel at CRL. "Sensible reforms, such as those in North Carolina and Maryland, will address predatory debt-collection practices without harming the borrowers’ ability to obtain credit. Evidence presented in our latest research report on debt collection also highlights the need for the Consumer Financial Protection Bureau to issue a strong debt-collection rule to rein in abuses in debt collection nationally."

State and federal officials should continue to strengthen the rules and laws for debt collection to better protect consumers and ensure fairness in the credit and debt-collection marketplace.

For more information, or to arrange an interview with a CRL expert, please contact Charlene Crowell at or 919-313-8523.