If you've ever been the target of persistent debt collectors, then you know how intimidating the calls can be. They often come at inconvenient times (even though they aren't supposed to) and keep coming until they reach their intended target and achieve their goal of collecting funds.
The Consumer Financial Protection Bureau, which is charged with overseeing consumer financial products and services, has set those debt collectors in their sights. The bureau just released two bulletins for the industry, reminding debt collectors to avoid misleading consumers about how paying off debts will impact their credit worthiness, credit reports and credit scores.
The bureau also started accepting complaints about debt collection problems from consumers this month. After receiving a complaint, the bureau asks companies to respond within 15 days with the intention of resolving the problem within 60 days. (The Federal Trade Commission has also focused on debt collection recently, with a $3.2 million penalty against Expert Global Solutions, a debt collection agency, for harassing people.)
[Read: How to Make a Financial Comeback.]
To help consumers interact with debt collectors directly, the bureau has released new tools: Fill-in-the-blank letter templates designed to help get pesky debt collectors off your back. The templates can be customized, and they include examples telling the debt collector to stop all communication and one directing the debt collector to go directly through a lawyer. (CFPB reminds consumers that they have the right to tell debt collectors to stop contacting them altogether. Doing so doesn't nullify the debt, but it can stop real or perceived harassment.)
"Dear debt collector," one template begins. "I am responding to your contact about a debt you are attempting to collect. You contacted me by [phone/mail], on [date]. You identified the debt as [any information they gave you about the debt]. Please stop all communication with me and with this address about this debt." The letter continues with more language disputing the debt.
Such templates, though relatively straightforward, can be helpful to consumers, who are often overwhelmed and confused by debt collectors' phone calls. Gerri Detweiler, credit expert and author of "Debt Collection Answers: How to Use Debt Collection Law to Protect Your Rights," also recommends these tips:
-- Never admit that you owe the debt or agree to pay the debt without first getting written proof that you actually owe it.
-- Never give the debt collector any personal information about bank accounts, your employment situation or assets.
-- Don't be tricked into thinking the debt collector is your friend. Sometimes debt collectors act friendly to get consumers to tell them things they shouldn't.
-- Do maintain good records of all of your interactions with the debt collector, including letters and phone calls.
The CFPB is poised to take on more financial topics in the coming months. CFPB's head, Richard Cordray, was confirmed for a five-year term this week, which gives the bureau more leadership stability as it tackles more financial services issues on behalf of consumers. Last year, it started supervising consumer reporting agencies, which collect information on consumers' credit worthiness. It's currently accepting consumer complaints related to student loans, vehicle or consumer loans, mortgages, money transfers, bank accounts and credit cards, in addition to debt collection and credit reporting.
The bureau's goals, according to its strategic plan, include preventing financial harm, promoting good practices, spreading information about consumer markets and behavior, and empowering consumers "to live better financial lives."
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