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Will new restrictions on debt collectors ease debtors’ stress?

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Jun 3, 2019 |

Financial problems permeate all aspects of debtors’ lives. Twenty-five million Americans who have debts in collections are already dealing with the stress and uncertainty that comes with not being able to make ends meet. Mailboxes fill with past-due notices and phones ring continuously with debt collectors aggressively pursuing past-due or delinquent balances.

The Consumer Financial Protection Bureau is trying to fast-track new rules that would place limits on third-party debt collectors who are under contract to pursue old debt or those who purchase delinquent accounts for pennies on the dollar.

Updated regulations would include:

  • Collection agents would be limited to seven phone calls a week
  • Upon reaching a borrower, agents must wait seven days before contacting them again
  • Emails and texts to collect debts are legal and not subject to limits

Consumer advocacy groups have taken notice of the endless text/email rule. They fear that it will spin out of control and spread to other messaging services, including Twitter and Facebook. The CFPB clarified that borrowers can opt-out from those communications and also barred collectors from posting about consumers’ debts on social media.

The CFPB opening the door for an endless stream of text alerts on consumers’ cell phones lines up with texting continuing its takeover as a valid form of communications. Actual spoken phone conversations are becoming passé. However, it is an unpopular move for already unpopular debt collectors. The agency’s own phones were ringing off the hook with complaints reaching 80,000 last year.

While debt collection agencies are lobbying for the caps’ removal, they remain resilient. Even with restrictions, they are committed to adapt by modifying or creating new business models.

All that comes at the expense of a debtor’s peace of mind.