There are few phone calls people want to avoid more than those from a debt collector.
Debt collectors have a reputation for being pushy, demanding, and even threatening. And some use intimidating tactics that may land on the wrong side of debt collection laws as well.
If you have ever dealt with debt collectors, you may be relieved to hear that the Consumer Financial Protection Bureau (CFPB) has outlined new rules to crack down on the very worst debt collection practices.
With 70 million Americans currently dealing with debt collectors, according to the CFPB, the new debt collection laws will most likely impact you or someone you know.
Here are three different ways the new regulations proposed by the CFPB would protect consumers from the worst debt collection practices.
1. Limits on incorrectly assigned debt collection
Under the new regulations, debt collectors would be required to ensure that the debt they are trying to collect actually belongs to the person they are trying to collect it from.
While that seems like a no-brainer, there really aren’t any debt collection laws opposed to just trusting sometimes incomplete or inaccurate information provided by the original debt holder.
For example, say a debt collector is looking to collect on a debt from John J. Smith. Perhaps a debt collector decides to go after John Jacob Smith for a debt that actually belongs to John Jackson Smith.
New CFPB regulations would restrict debt collectors who often times may knowingly call the wrong person just to see if they can collect the debt anyways.
The third party debt collector would have to verify the full name, last-known address, and the amount owed. That way, they have a reasonable level of certainty they are contacting the right person before they attempt to contact them in the first place.
2. Reigning in excessive collection practices
Under current debt collection laws and regulations, debt collectors regularly call, text, and email the same person repeatedly, pressuring them to pay. If no one answers, they just keep contacting them until they get through.
The new proposed debt collector laws would limit third-party debt collectors to six attempts per week to try to reach someone, and three total attempts once the debtor is reached. Those totals include phone calls, emails, and text messages.
Many debt collectors employ practices that are recognized as disruptive and excessive. There are some stories of debt collectors contacting employers saying that they are calling about a debt owed by one of their employees. This strategy is actually against current CFPB regulations.
Stricter rules proposed by the CFPB would limit some of the most excessive behavior seen from the debt collection industry by making it easier to stop debt collectors from calling your place of work.
3. New disclosure requirements
Debt collection laws include a statute of limitations that limits how long a debt can be collected through the court system. This is also known as time-barred debt.
Under current rules, debt collectors can call you about old debts indefinitely, even years after the time-barred debts are no longer enforceable in court.
The new debt collection laws would not stop debt collectors from calling on old debt. However, they would have to disclose if they are contacting you about a debt after the statute of limitations on that specific debt has expired.
Keep in mind though that debt collection laws are different in every state. Some statutes of limitations range from 3 years to 15 years for signed contracts.
In Colorado, for example, the limit is six years for written debt contracts like medical treatment agreements or credit cards issued. Let’s say someone in Colorado went to their doctor and did not pay their bill. The doctor, or any third party debt collector, has up to six years to sue for that debt in court.
After six years, a debt collector can still call you in Colorado. But, under the new rules, they have to tell you it is past the six years and you can’t be sued for it.
It is important to note that just because a debt collector cannot sue you in court does not mean that the debt is discharged or not owed.
If a borrower continues to ignore the debt, it will remain on their credit report and can prevent them from getting a new mortgage, car loan, credit card, or even a job. And if a debt collection shows up incorrectly, it is important to dispute that debt and have it removed.
Great steps forward for debt collection laws
Debt collection practices undoubtedly need some improvements. They were the number one cause of consumer complaints to the Federal Trade Commission in 2015.
That’s why the CFPB is working on the first major overhaul of debt collection laws since the Fair Debt Collection Practices Act of 1977. After forty years, the federal government is working to take steps to better protect consumers from predatory financial practices.
While debt collectors are sure to find new tactics once these are eliminated, debtors will be able to rest easier when these new debt collector laws go into effect. And if you’re looking for a more in-depth look at debt collection laws and practices, check out this great segment on HBO’s Last Week Tonight with John Oliver.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|