Collection companies are allowed to contact consumers and request payment, but within reason. Regulations on what is and is not allowed were passed in 1977 under the Fair Debt Collection Practices Act. This law was passed with the intention that it would serve two purposes:
- Consumer protection. The law is designed to protect consumers from harassment from debt collection companies.
- Business protection. The law is also designed to protect businesses that are attempting to legitimately receive payment for their services. This is done by working to ensure that debt collection companies that use illegal and harassing collection techniques do not dominant the market.
The legal world is always evolving, and a law passed over three decades ago is ripe for reform. Lawmakers are pushing for this law to get updated, and it appears a proposal to implement some changes will soon take effect.
Three of the key points to take note deal with changes to how the debt collection companies communicate with the consumers that allegedly owe debt.
Change #1: Revisiting proper communication techniques
This proposal expands the original regulations, stating that debt collection companies will also be limited in the number of times they can contact consumers. Regulations are also under consideration that would outline whether or not a credit collection company can leave a message for the consumer.
One issue the collection companies point to that has kept them from leaving messages is the fact that informing a third party about the alleged debt is generally illegal under current law. As a result, these companies argue that they cannot leave a message on an answering machine because it could be heard by a third party.
In an effort to comply with the law, collection companies argue that they must make multiple calls until the intended party answers the phone. This change would be designed to reduce the frequency of these attempts.
Change #2: Clear explanation of the debt
If requested, the collection company would be required to provide more information about the debt it is attempting to collect. More specifically, the company would have to confirm that the information it has is correct before continuing to pursue payment.
This change is intended to help better ensure that debt collection companies are pursing payment from the right person. The use of collection efforts by these companies in an attempt to get the wrong person to pay off a debt that isn’t even owed, or getting someone to pay off a debt that was already paid in full, are not uncommon issues. This proposal is intended to reduce the risk of these issues.
Change #3: Ease ability to dispute debt
A final change that consumers should be aware of is the increased ability of a consumer to challenge an alleged debt. If a debt is disputed, the collection company must substantiate its claim that the debt is owed. If unable to do so, the company would be required to cease collection attempts.
Struggling with debt? Bankruptcy can help
Consumers that are struggling with debt have options. In some cases, bankruptcy may provide the best solution. When granted, a successful petition for relief through bankruptcy ends creditor collection attempts.