Debt Collection, Debt Relief

Predatory Debt Collectors Barred from PPP Loans Under New Bill

New legislation introduced this week will effectively bar all predatory debt collectors from receiving money from funds received under the federal government’s Paycheck Protection Program (PPP).  

The measure has been introduced by Representatives Suzanne Bonamici (D-Ore.) and Marie Newman (D-Ill.). In announcing the proposed legislation, the lawmakers pointed to an analysis conducted by the Washington Post in January 2021. The Post reported several incidents where debt collection companies had harassed consumers for payment on debts after they had received their own financial assistance from federal PPP loans. It was their hope that this legislation will curb these practices and will effectively block predatory debt collection firms from receiving PPP money themselves.  

Since it’s inception, the $670 billion Paycheck Protection Program (PPP) has provided forgivable loans for amounts up to $10 million for qualifying small businesses. The purpose behind them was to keep struggling small businesses afloat during the COVID-19 pandemic. 

While thousands of businesses have struggled to survive during this time, many debt collection firms have reportedly thrived. Many of them were able to successfully receive aid through the initial set of PPP loans issued, leaving many consumer advocates to question whether debt collection firms should be allowed to receive these funds.    

According to the Washington Post study, over 1,700 debt collection agencies received PPP funds, totaling over $520 million in funds received. Even after receiving this money, many of them continued to pursue collection of debts through harassment or other abusive methods.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

COVID-19, Debt Collection

Debt Collection Lawsuits Pause While One Debt Collector Continues to Pursue Collections

At the start of the COVID-19 pandemic, most debt collectors hit the pause button on collection lawsuits due to widespread national lockdowns. However, one of the largest debt collectors, Sherman Financial Group, continued to pursue its collection efforts. 

According to a study conducted by the Wall Street Journal, Sherman Financial Group had the largest increase of any debt collection firm between March 15, 2020 and December 31, 2020. The study analyzed filings from five state-court districts from the start of the pandemic to the end of 2020. The number of filings went up by 52 percent from the previous year. In comparison, debt collection filings went down by 24 percent with respect to the industry overall. 

Sherman subsidiaries filed 15,420 more debt collection lawsuits in 2020 than they did in 2019 in these five districts aloneThe districts surveyed serve approximately 13 percent of the nation’s population.   

In previous years, Sherman has been a smaller debt collection company. However, financial analysts believe that the company has established its reputation as a nonconformist in the debt collection industry. This is not the first time where Sherman has chosen to take advantage of a financial crisis to expand their reach in the industry. They behaved similarly during the 2008 financial crisis. 

Most debt collection companies have filed fewer lawsuits during the pandemic due to borrower hardship. For example, two of Sherman’s competitors, including PRA Group and Encore Capital Group filed fewer lawsuits in 2020 than in 2019 and limited new collection efforts. Another debt collection company, Oportun Financial Corp, suspended all new debt collection lawsuit filings, dismissed many of their pending cases, and capped interest rates on its outstanding loans. 

Of the lawsuits filed in the five districts surveyed by the Wall Street Journal, Sherman-owned subsidiaries accounted for 12 percent of the debt lawsuits filed, which was a six percent increase from the previous year.  

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Source: The Wall Street Journal

Bankruptcy Law, Debt Collection

Understanding the Fair Debt Collection Practices Act (FDCPA) 

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

The FDCPA was signed into law in 1978. The law designates what type of behavior is acceptable by debt collectors and what type is considered abusive and unethical.  The law was created to curb tactics that had largely gotten out of control by companies engaging in debt collection.  

Bankruptcy Law, Credit Card Debt, Debt Collection

Important Tips to Know about Credit Card Debt Forgiveness

Credit card debt plagues so many today. Even with the economic stimulus relief, some consumers are having to utilize credit cards to make ends meet. Escaping the load of credit card debt can seem like an impossible feat. Whenever someone offers a way out or credit card debt forgiveness, it can be easy to jump to accept the offer. The problem is credit card debt forgiveness can be more complicated than simply having the debt forgiven.   

Not All Debt Forgiveness Strategies Are Equal  

Credit card debt is forgiven usually from two strategies, namely debt settlement or bankruptcy. Many consumers try a third strategy, which involves ignoring the amount owed until the statute of limitations has passed for collecting on the debt.  However, the damage that can result to the consumer’s credit score as a result of this failed strategy make it often not worth the wait.  

Bankruptcy Law, Debt Collection

Can a Debt Collector Try To Collect on Debts Discharged in Bankruptcy?

A bankruptcy discharge gives a person a fresh financial start, freeing him or her from the stress of collection calls and aggressive debt collection practices. However, the fact that a debt has been discharged successfully in a bankruptcy case does not necessarily mean debt collectors will still not try and attempt to pursue collection of the debt. What happens in these situations?  

Under the U.S. Bankruptcy Code, a discharge is a permanent court order that prohibits creditors from pursuing any type of collection on discharged debts. These prohibited actions include filing legal cases to collect on the debt, as well as communications with the consumer via personal contacts, letters, and phone calls. Essentially, the discharge in a Chapter 7 or Chapter 13 bankruptcy case relieves the filer from any personal responsibility to pay off the debt.  

Not all consumer debts are dischargeable in a bankruptcy caseCertain debts are prohibited as a matter of public policy from being discharged, including government-backed student loans, child support, alimony, tax debt, and any debts incurred because of improper or illegal behavior.  Creditors for these debts can continue collecting on them even after the bankruptcy case is finalized.  

Debt Collection

Venmo’s Debt Collection Practices Under Investigation by the CFPB

Popular digital money-transfer service, Venmo, is finding itself at the center of a Consumer Financial Protection Bureau (CFPB) investigation. The company that is owned and operated by PayPal Holdings, Inc. received a “Civil Investigative Demand” from CFPB with respect to Venmo’s debt collection processes and unauthorized fund transfers.  

Venmo has been the subject of a series of investigative articles by The Wall Street Journal in both 2019 and 2020 with respect to their aggressive debt-collection tactics. It reported that Venmo made threats to users who overdraw their accounts. These threats were also made to users who were the victims of scams. Even during the difficult financial times brought on by the COVID-19 pandemic, the company has reportedly continued its aggressive collection  practices.

Debt Collection

Debt Collectors Will Soon Be Reaching Consumers via Text and Social Media

Debt collectors will soon have another way to reach consumers. The Consumer Financial Protection Bureau (CFPB) released a ruling outlining how collectors will soon be able to reach consumers via text messaging and social media The federal government has cleared the way for collection agencies to send unlimited texts, emails and even instant messages on social media platforms. 

Debt collectors will be required to include instructions on how to opt out of these messages within the text of the communication. The CFPB will also limit collectors to calling consumers to seven calls per week per debt.  

Credit Card Debt, Debt Collection

Debt Does Expire- Here’s Why You Shouldn’t Wait for the Clock to Run Out

At some point, consumer debt is so old that it is no longer legally collectible. At this point, the debt is said to be past the statute of limitations, meaning no creditor or debt collector can take the consumer to court to collect on the debt. However, even though creditors cannot collect on debt past a certain time period, it does not mean this is the best strategy for consumers to seek in cancellation of this debt.  

Every state has a set of laws that govern how long a party has to pursue a legal cause of action. After the timeline has passed, the individual can no longer file a lawsuit. For debt collection, the statute of limitation hinges on the type of debt. In Florida, the statute of limitations for debts involving written contracts, such as personal loans, is five years. The statute of limitations is four years for debts that stem from oral contracts or revolving accounts, the most common of these being credit card debt. After that point, the creditor is not able to legally collect on the debt. 

Debt Collection

State and Federal Agencies Teaming Up to Combat Illegal Debt Collection

Debt collection is a profitable business in the U.S., but not all debt collectors follow legitimate, legal collection practices. According to officials from the Federal Trade Commission (FTC)most consumer complaints made annually involve illegal debt collection practices, which is why they have made recent efforts to crack down on these types of tactics. 

In response, the FTC has launched a multi-agency campaign called “Operation Corrupt Collector.” This crackdown campaign focuses on educating consumers on how to identify illegal debt-collection practices, as well as enforcement against debt collectors who are found to be breaking the law.  

Debt Collection

Can a Creditor Come After Money that is Gifted?

The law allows for a certain amount of money to be gifted to individuals with no tax consequences on an annual basis. For the 2020 tax year, the gift tax exclusion amount is $15,000. Many aging parents take advantage of this exclusion to reduce their probate estate and avoid tax penalties by gifting up to this amount to their adult children annually. However, if the adult child they are gifting this money to has his or her own financial struggles and is being pursued for creditors, that money could be fair game. 

The problem is that this money is not protected if the receiving party is being pursued by a creditor for an outstanding debt. If the debt is valid and still legally collectible, money that is gifted to the consumer is reachable for purposes of satisfying what is owed.