Kids & Money

Help is on the way to deal with aggressive debt collector practices

Proposed rules aim to rein in some of the more abusive debt collection tactics.
Proposed rules aim to rein in some of the more abusive debt collection tactics. The Associated Press

When I started getting calls from debt collectors more than 10 years ago, I assured them repeatedly that they had the wrong guy.

The Steve Rosen they were looking for, who had past-due student loans, credit card debts and was behind on child support payments, had a different middle name and lived at various times in Virginia and Ohio and who knows where else.

But the calls kept coming to me — including one in the evening just a few months ago. This despite promises from the collection agent that my name and contact information would be purged from their files. I think my request to have my name cleared was simply tossed in the trash instead.

I was even blind-sided a few years ago when a county sheriff’s deputy knocked on my front door. He was prepared to serve me with court documents compelling me to pay up. My kids, who saw it all, thought I’d be heading to debtor’s prison.

Last week, I got some vindication for all those years of irritating phone calls and other hassles from being wrongly targeted by debt collectors. The Consumer Financial Protection Bureau released a summary of proposed new rules intended to rein in some of the most aggressive tactics practiced by debt collectors.

It marks the first boost in federal regulatory oversight of the debt collection industry in about four decades, according to The New York Times.

About 70 million consumers have past-due debts that have been handed over to the more than 6,000 collection agencies nationwide, the federal consumer agency said. Student loan debtors just happen to be one of the fastest-growing markets for collection companies — with nearly 8 million borrowers in default with a combined balance of $110 billion, The Wall Street Journal reported.

The consumer agency initially is focusing on rules tied to so-called third-party debt collectors — like the ones who’ve contacted me on behalf of creditors.

Among the proposed reforms:

▪ Collection companies would have to “scrub” their files and substantiate the debt before contacting consumers. That means having correct information, including the correct full name of the consumer.

▪ Collectors would be limited to six communication attempts per week to reach the consumer. Rules would also make it easier for borrowers to limit calls while they are at work, during certain hours, or on a particular phone line.

▪ Collectors would be required in initial notifications to include the consumer’s federal rights and more specific information about the type of debt in default.

▪ If a consumer disputes the validity of the debt, collectors would have to stop repayment efforts until documentation is checked.

Consumers also have responsibilities to understand their rights when contacted by debt collectors, to ask questions when pressured to pay debt they’re not familiar with, and to seek help from low or no-cost credit counseling services to work through loan repayment overloads.

There is much not to like about the debt collection business. Hopefully, these reforms will end much of the most abusive collection practices. I, for one, am hoping for no more phone calls and no more visits by a county sheriff.

Steve Rosen: 816-234-4879