CFPB’s Advice on Debt Collection
Dealing with a debt collector can be difficult and intimidating. You may be unsure of how to protect yourself and wonder if you're taking the best approach possible. Fear not – there's lots of advice out there on how to deal with debt collection agencies.
Even better, there's also lots of government-supported advice from bodies such as the Consumer Financial Protection Bureau (CFPB). If you're wondering what the CFPB'S Advice on Debt Collection is, keep reading on to find out more.
The Consumer Financial Protection Bureau (CFPB)
The Consumer Financial Protection Bureau is an agency of the U.S. government. They were created to ensure that consumers are protected in the financial industry. They have a wide-reaching jurisdiction and cover banks, debt collectors, payday lenders, and more. If debt is involved, there's a good chance the Consumer Financial Protection Bureau is too.
The agency was created in response to the financial crisis of 2007/2008 to help people and companies navigate through difficult financial situations. The CFPB enforces rules that financial institutions must follow and also keeps on top of their behavior. This includes consumer complaints made about these institutions.
How Can the Consumer Financial Protection Bureau Help Me?
If you're dealing with debt, it's easy to feel lost and isolated with no one to turn to. You're not sure which companies you can trust or whether or not you're going about becoming debt-free in the best way possible. The good news is that there's a lot of help available to those in debt, especially from the government.
The CFPB has lots of useful advice on how to deal with debt collection and even has rule on how debt collectors are able to contact you. It pays to read through the CFPB's advice when it comes to debt collection to make sure you know what you're dealing with such a debt collector get in touch.
Why is a Debt Collector Contacting You?
Under the federal Fair Debt Collection Practice Act, a debt collector is a person or company that collects debt owed to others. These companies exist to collect debts and distribute them to original creditors.
A debt collector may be calling you for the following reasons
- A creditor has claimed that you are past due on a debt owed. Creditors can either chase up overdue payments with people in-house or sell your debt to an outside agency.
- They may be calling you in order to locate someone you know. While they aren't allowed to reveal that they are collecting a debt, they can work hard to find out information about someone.
- They are collecting debt owed
If a debt collector claims that you owe money, take a deep breath and get your ducks in a row. It's important to double-check that you definitely owe the money in question. If you find yourself becoming overwhelmed and confused, it can be helpful to hire an attorney, or speak with a credit counseling organization before proceeding.
Companies such as MRS Associations may have gotten in touch with you about your debt. If you're confused about what to do next, read this article for a good MRS Associates review.
Can I Ignore A Debt Collector?
While ignorance is bliss, this isn't the case when it comes to debt collection calls. If you ignore or avoid a debt collector, they may use alternative methods in order to get in touch with you. They may even decide to sue you if you continue to ignore them.
It's best practice to eventually speak to a debt collector with expert knowledge under your belt so you don't make any common mistakes. The CFPB has sample letters on their website that can help you respond to a debt collector in case you need assistance.
These sample letters can help you reach out for more information about the debt they allege you owe, ask debt collectors to stop contacting you and protect some of your rights as an individual.
The CFPB also recommends speaking to a trusted credit counselor. A good starting point is by getting in touch with the Association if you're requiring assistance.
What is CFPB's New Debt Collection Rule?
The Fair Debt Collection Practices Act makes it illegal for debt collection agencies to harass you or speak to you with abusive language when trying to collect on a debt. In addition to this already existing rule, on November 30, 2021, the CFPB's new Debt Collection Rule became effective. Put simply, this rule clarifies how debt collection agencies can speak with you, and also details the information they need to provide you with from the get-go when trying to collect the debt. They are also required to provide you with information about your rights before proceeding.
The New Rule Also Details the Following Information:
Debt Collection Validation Notice:
When a debt collector first gets in touch, they're required to provide you with certain information about the debt in question. Once this information is passed on to you either through writing or electronically, this is considered a validation notice. It needs to include the name and address of the debt collector, name of the creditor involved, account number, itemization on the debt which includes interest, fees, etc, the current amount of debt and your rights.
How Often Can a Debt Collector Call:
Debt collectors are not allowed to call more than seven times within a seven day period or within seven days after speaking with you on the phone about the debt in question.
Can a Debt Collector Contact Me On Social Media?:
Debt collectors can contact you on social media if they follow certain rules. They have to keep the messages private, identify themselves and provide you with a method of opting out of any further communication.
When Can a Debt Collector Report My Debt to a Credit Reporting Company?
Debt collectors need to follow certain rules under the new Debt Collection rule when it comes to reporting your debt to a credit reporting company. Before they do this, they must speak to you in person or on the phone about the debt in question or send you a letter or electronic communication about the debt and wait approximately two weeks before declaring it as undeliverable. If a debt collector sends you a validation notice, this means they've exhausted all avenues when trying to contact you and can begin to report your debt to credit reporting companies.
Follow CFPB's Guidance For Handling Your Debt
If you're looking to become well prepared before speaking with a debt collection agency, it's a good idea to familiarize yourself with the advice the CFPB has in terms of how to protect yourself and act before, during and after all communications.
Do your homework and find out more information about the new Debt Collection Rule and make sure the agency you're dealing with always acts professionally at all times, without any sort of harassment or abusive behavior.
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