New Requirements Seek To Confine Debt Collections
Debt collectors could be dealing with stricter regulations on their ability to collect money if bills proposed by the governor and New York state Assembly ever get passed by the state Senate. Before the state Senate went into a terminal impasse, the state Assembly passed a series of laws aimed at cutting down on debt collector abuses that include threatening phone calls, harassment and intimidation. In addition, Gov. David Paterson has proposed similar measures to protect the public from abusive consumer debt collection practices.
The proposals would establish the Consumer Credit Fairness Act, which would reduce the current statute of limitations on personal debt from six to three years and would prohibit debt collectors from recovering debts that exceed the statute of limitations. It would also require debt collection firms to provide consumers with a written Debtors Bill of Rights that details the manner in which a debt collection company can recover debt and informs customers of frequent dishonest practices.
Debt collection company’s would also be required to acquire a license of operation from the state of New York and would require firms to present a summary of the methods used to confirm the exactness of debts it seeks to recover, a clear record-keeping policy and whether it intends to sell debts. Don L. Hochler, an East Meadow attorney, said the projected statutes are a fair way to deal with abuses that have grown more common with the economic downturn.
According to the governors office, there were almost 3,900 complaints made to the state about debt collectors in the past four years. The consumer ordinarily had no idea about any of the changes in debt holders and didnt know who it was that was trying to collect on the debt.
The proposals would obligate the collectors to adapt with the guidelines of the federal Fair Debt Collection Practices Act, which restricts calls to consumers to between 8 a.m. and 9 p.m. Kevin Schlosser, chairman of the litigation and dispute resolution law practice at Meyer, Suozzi, English & Klein in Garden City, said more people are paying attention to debt collection practices because of the economy.
Debt collectors capital job is to communicate with consumers and resolve consumer problems, Cherner said. Proposals that only restrict communication will only cause a rise in complaints.
Mallory McGuinness is employed by a collections agency that works with a debt collection lawyer. Also, she writes pieces on business and finance, consumer spending and collections agencies.
What Is The FDCPA?
In order to do battle with the problems associated with harassing debt collectors and debt collection companies, the Fair Debt Collection Practices Act (also known as the FDCPA) was designed. The laws and regulations legislated by the Fair Debt Collection Practices Act not only shield consumers, but they also aid debt collection agencies as well by encouraging them to operate in a serious and professional manner when engaging in communication with supposed debtors.
In most standings lenders are within their rights to go after payment. This includes situations where the borrower is neglectful in their responsibilities and then afterwords default on their financial obligations, and or if the borrower simply needs some more time due to acrid financial circumstances and strain. These above situations represent instances in which the lender is not getting his due payments from the borrower when they began with a reasonable expectation of being paid back in an adequate time frame. No matter the reason in these cases, the lender in question is legally within their rights to seek payment that they are due.
In these situations, the majority of the time lenders have no other alternative but to become involved with a collection agency. The goal of collection agencies is to recover and collect all of the monies that are unsettled to their clients (the lenders). Due to the Fair Debt Collection Practices Act, collection companies can no longer act rashly and with disinterest for the consequences of their actions when making an effort to recover monies for their clients.There are several clauses that come along with the Fair Debt Collection Practices Act as enacted in 1978. These clauses both protect debtors and enable collection companies to strongly pursue valid debts.
Even if a debtor instructs a collections representative to conclude all further contact with him there are other means by which a debt collection representative may strive for the valid debt. For example, under the FDCPA, while the collection rep must accept the debtors request to cease any further contact with them, they are also perfectly within their rights to make the debtor aware that they intend to pursue the debt via legal channels through an attorney.
If the collection agency in charge of recovering the delinquent account cannot communicate with or cannot reach the debtor, then they are legally allowed to contact third parties related to the debtor. However, under the FDCPA there are some boundaries to contacting third parties. First and foremost, the collection rep cannot harass the third party or be non-courteous. Also importantly, the collection rep cannot violate the right of privacy of the debtor by disclosing the nature of the call to this third party.
Among protocols for collection agencies to abide by, the Fair Debt Collection Practices Act also has a penalization system in place for those collection companies that do not abide by the aforementioned stipulations. These penalties against collection agencies found to be in violation of the FDCPA include: fines; license revocation; and even legal actions.
At first glance it appears as though the guidelines of the Fair Debt Collection Practices Act are strongly skewed toward the debtor. However, these rules also protect the debt collection agency by helping them steer to wards fair practices and policies in a courteous and professional manner. Without the FDCPA, the unprofessional behaviors of some select few collection agencies would go unchecked and thus would undermine the entire reputation of the business of debt collection.
Mallory McGuinness works for a collections agency that works with a debt collection lawyer. Also, she does articles on business, finance, consumer spending and collections agencies.