Typically the phrase "debt collector" causes a terrifying shudder among most consumers. We know that debt collectors, in general, get a bad reputation for being rude, abusive or even heartless when attempting to collect. Ouch. As a debt collections agency, we prefer to treat people the way we'd like to be treated. We also like to keep things positive. And no, this isn't an April Fool's joke.
Believe it or not, there are some debt collections stories that aren't so bad.
Debt Collectors Won't Charge Huge Fees on Student Loans
A recent guidance by the Department of Education advised loan companies to charge punitive fees on borrowers of privately-held, government-backed student loans. 26 creditors, all loan companies who collect on the Federal Family Education Loan (FFEL) program, have spoken out against these penalties. If debtors can respond to notice of default within 2 months, entered into a payment program and continued to pay, they would not be penalized the default fee of 16% of the total balance owed.
FTC to Return Funds to Victims of Collections Scheme
Fraudulent schemes come in many forms (including fake IRS calls) but there are federal regulations and institutions for consumers to turn to. The defendants in this particular debt collections scheme violated the Fair Debt Collection Practices Act by seeking out Spanish-speaking consumers and threatening legal action or arrest if the individuals didn't pay. In some cases, these incidents result in partial payback of funds but in this case, the Federal Trade Commission was able to recover and will be paying back the full amounts to the victims.
Colorado Seeks to Protect Consumers from "Zombie Debt" Collectors
While there is a federal Fair Debt Collection Practices Act, the state of Colorado has its own FDCPA to protect its citizens from unscrupulous debt collectors. Colorado legislators, on both sides of the aisle, are behind a bill to extend the state FDCPA another 11 years as well as limit collectors from attempts to collect on "zombie debt". Zombie debt is old debt that is purchased from the original creditor by debt collections companies for pennies on the dollar. The debt collectors then attempt to collect anything they can on the debt. The proposed bill would forbid collectors from attempts to collect on debts over 4 years old, require the original creditors to include all documentation on the debt when selling it, and prohibit the selling of debts that have already been paid.
Debt Collectors Treat their Customers with Respect
Okay maybe there isn't a direct news article with this headline but regulations such as the Fair Debt Collections Practices Act were created not only to protect consumers, but to also protect debt collectors that are fair and respectful. Debt collections agencies must abide by the rules in the FDCPA or they will likely be hit with punitive fines and court costs as well as paying the consumer back. The truth is, you don't hear about all of the debt collectors that are kind but firm on phone calls. You don't hear about those who work with consumers to set up a payment plan that works for all involved. You don't hear about those debt collection agencies who have a great recovery rate for their clients and still manage to honor the rules they're supposed to follow. The bad news is expected. The good news is still out there.