Debt collectors can be relentless when trying to reach consumers. The law precludes debt collectors from calling during certain times of the day, but what about on holidays?
Dealing with debt collectors can be stressful. Their job is to get the consumer to pay on a debt at any means necessary, which can often mean through coercion, harassment, and fear. Many debt collectors have been known to use aggressive or illegal tactics to collect on a debt, leaving many consumers to feel like they have no choice but to make payment to get them to go away. However, federal law offers certain protections when it comes to debt collectors. It is important that consumers understand what these protections are so that they are aware of what rights they do have when dealing with debt collectors.
According to the Consumer Financial Protection Bureau (CFPB), nearly one in every four people have a debt in collections. Illegal debt collection practice is a common complaint made to the CFPB.
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.
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 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.
As Americans begin receiving their stimulus checks from the $2.2 trillion CARES Act, many who are struggling with debt, worry this money will be intercepted by creditors seeking payment. More than 80 million stimulus checks have been processed thus far, which is a huge source of relief for the 20 million Americans out of work.
Many creditors view these stimulus payments as a chance to receive payment on outstanding debt, especially those that have already been reduced to court judgments. If a financial institution is given a garnishment order, it is possible they will immediately freeze that amount of money deposited into the account, only providing the consumer a limited amount of time before the funds are taken by the creditor. However, certain measures can be taken to protect this stimulus money from creditors.
Debt collectors will do just about anything to get a consumer to pay on a debt, their job depends on it. This can even include the collection of old debts that are past the statute of limitations. According to recent figures from the Consumer Financial Protection Bureau (CFPB), in conjunction with a complaint database through consumer advocacy group, U.S. PIRG Education Fund, 44 percent of all complaints against debt collectors have to do with attempts to collect on a debt that is not even owed by the person receiving the call.
The problem is many consumers are not aware that they do not owe on the debt, and they are not fully aware of their legal rights when it comes to debt collections. Under the Fair Debt Collection Practices Act (FDCPA), third-party debt collectors are limited in how many times a day they can call consumers, as well as the type of communication and language they may use while collecting on the debt. If the communication constitutes harassment, the consumer has the right to ask the debt collector to stop contacting him or her, and file a lawsuit against the collection agency.
When someone is facing a debt collection action, it can seem like a hopeless situation. It is a situation, however, that many Americans face. According to the Consumer Financial Protection Bureau (CFPB), more than 70 million Americans have interacted with a debt collector.
Of these 70 million, 25 percent of them report feeling threatened during their communications with debt collectors, who often use aggressive methods to obtain payment. If the collection gets to the point where legal proceedings are filed, certain steps can be taken to protect your rights.
- File a Response
The biggest mistake that consumers make is to ignore the paperwork when they receive it. A consumer who is facing a debt collection proceeding will receive a summons and complaint, informing him or her that a legal action to collect upon the debt has been filed. This paperwork will provide information regarding how long the individual has to file a response to the legal action. If a response is not filed, however, the debt collector or creditor can get a default judgment against the individual, resulting in a garnishment of the consumer’s wages. If that happens, the court can add the collection agency’s legal fees, court costs and interest to the balance.
Debt collectors may soon have even more ways to reach consumers who are past-due on their debts. A new proposed rule from the Consumer Financial Protection Bureau (CFPB) may make it possible for debt collectors to contact consumers via email or text communications as they attempt to receive payment on overdue debts.
This news does not come as a pleasant surprise for many. After all, debt collectors do not have a good reputation for this very reason. They can be persistent, if not relentless, when it comes to debt collection.
It is reported that the CFPB received a record 84,500 complaints from consumers about debt collectors in 2017. The industry earns $10.9 billion annually and does whatever it takes to receive payment on a debt. The industry does not seem to be slowing down either. Since the end of the recession, American consumers have taken on more debt, including car loans, mortgages and credit card debt.
This news follows recent revelations that are now coming out about the direction the CFPB has taken since the start of the Trump administration. Many critics argue that this move is further evidence that the agency is no longer going after corporations for financial abuses as hard as they have in the past. After all, this latest move does not seem to protect consumers as much as it protects the companies seeking to reach these consumers.
Arguably, the number of communications from collectors will increase, if and when this rule takes effect. However, the law does limit the frequency and content of communication being received. The Fair Debt Collection Practices Act (FDCPA) provides rules that collectors must follow. However, this law was originally written in 1977, which means it has not been updated to include email and texting technology. It is unclear at this point whether the law will be modified to reflect the updates in technology.
Without having any strict regulations to guide debt collectors on how often they can communicate with a person via text or email, collectors are essentially free to do what they want when contacting someone. The number one piece of advice we give to people dealing with creditors is to be honest. If you are unable to make a payment, do not make a promise to do so and never hide from creditors.
If you are ready to put an end to creditor harassment and make a fresh start, consult an experienced Miami bankruptcy attorney at Kingcade Garcia McMaken. 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.
When someone is entering retirement, the last thing that person wants to deal with is mounds of credit card debt. For the most part, retirees are living on a fixed or limited income, which means they have very few financial resources to pay off any lingering debt they may be carrying.
A fixed income also means there is little ability to handle any unexpected financial crises, which can include a costly home repair or medical expense. In the event the unexpected happens, some retirees are forced to rely on credit cards or personal loans to cover the costs. The interest on a personal loan or a single missed credit card payment, can cause the debt to spiral out of control quickly.
Here are some debt payoff tips for seniors struggling with credit card debt.
Refinance your debt.
One possible way to pay off a large amount of credit card debt is through refinancing or consolidation of the credit card debt. This payment could be made through a home equity line of credit (HELOC) if you own your home and hold a good amount of equity in it. A HELOC carries a lower interest rate than other methods of consolidating or refinancing debt since it is attached to collateral and is a secured loan.
Credit card debt can also be paid by consolidating all cards into one card through a balance transfer. By doing a transfer, the cardholder can attack one, larger debt, rather than pay minimum payments on multiple cards every month. However, these transfers normally come with a promotional period which means the cardholder can only benefit from the zero or low interest rate for a set period. After that time period expires, the cardholder will soon find his or her rates increase significantly.
Examine your budget.
Paying off your credit card debt can be nearly impossible, if you do not establish a set budget. By putting together a list of necessary expenses and reviewing what purchasing habits put you into debt, you cannot cut unnecessary expenses and free up money to go towards your credit card debt. It is also recommended that you avoid using your credit cards during this time period when you are working on paying off outstanding balances.
Target the card with the highest interest rate.
If debt consolidation is not a possibility and you are struggling to pay multiple credit cards, one method that is recommended is to focus on paying one card at a time. This method does take time and patience, but it can be successful. Look at what credit cards you have and list what interest rate is on each card. Take the card that has the highest interest rate and throw whatever extra money you may have towards that card first, while continuing the minimum monthly payments on the other cards. Once that card is paid, then focus on the credit card with the next highest interest rate and so on, until all cards are paid in full.
Work a part-time job.
Retirement does not always mean that you will never hold another job. In fact, many retired individuals choose to take a part-time job not only to earn some extra money, but to socialize and be out with people. Many retirees find a great deal of success in part-time consulting or freelance work after retiring from a long-term professional career.
For seniors struggling with insurmountable debt, help is here. Do spend your golden years being hounded by creditors. Credit card debt is one of the most common problems we see facing those with serious financial issues. The stress can become compounded with collection calls and the threat of lawsuits. Bankruptcy not only gives people a financial fresh start, but it is a powerful tool that can be used to protect valuable assets, including property, vehicles and retirement savings.
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.