Debt collectors & collection agencies

Debt collection has become a $13 billion industry with more than 40,000 employees chasing down those who have fallen behind on bills…or not. According to the Consumer Finance Protection Bureau (CFPB), one out of three American adults – about 77 million people — have credit files with debts in collection. It only takes a few missed payments before debt collectors start to call to demanding money.

Debt collectors generally can’t call before 8 AM or after 9 PM. If your first contact with a collector is by telephone, you may want to tell the caller that you want all future contact in writing rather than by phone. You can also instruct the collection agency not to call you at work. Follow up on any requests in writing right away. Your letter should include requests about contacting you and other matters discussed in your first contact. All correspondence, including disputes, should be sent to both the collection agency and the creditor by Certified Mail, Return Receipt Requested. If you notify collection agencies not to contact you at all, they are entitled to contact you one more time to explain how they intend to proceed. We provide sample letters below.

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Drawbacks to debt consolidation

Most Americans carry some form of debt. It can be student loans, credit cards, mortgages, auto loans or business loans. Because they can be overwhelming, especially after a setback that reduces income, soome consumers turn to debt consolidation loans to simplify or improve the terms on their borrowing obligations. But be warned, consolidation loans can sometimes turn out to be a disadvantage in the long run.

Debt consolidation loans work by turning multiple debts into a single loan through one lender. This means that you are paying down one large loan rather than holding an assortment of smaller loans with multiple payments. Debt consolidation loans loans are usually offered by many financial institutions, such as banks and credit unions, but there are also consolidation services through more specialized companies.

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The debt settlement process

In debt settlement, a legal process, debtors have the opportunity to relieve, adjust, or restructure their debt through various measures and efforts. The goal is reach an agreement on an acceptable settlement on behalf of both the debtor, as well as on behalf of the institution in ownership of the defaulted loan. Most settlements take place through negotiation between the financial institution in ownership of the outstanding debt and the person with a loan.

The debtor can range from a private citizen to a business enterprise who has incurred debt through the inability or failure to repay an outstanding loan furnished by a lender or lending institution.

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Ciber Files For Chapter 11 Protection And Secures $41 Million In DIP Financing To Fund Ongoing Operations During Process And Agree To An Asset Purchase Agreement With Capgemini America

Ciber LogoGREENWOOD VILLAGE, Colo., April 10, 2017 /PRNewswire/ — Ciber, Inc. (NYSE: CBR), a leading global information technology consulting, services and outsourcing company, today announced that it and certain U.S. subsidiaries filed voluntary petitions seeking relief under Chapter 11 of the…

PR Newswire: Bankruptcy

CFPB March 2017 complaint report highlights credit card complaints, complaints from Massachusetts consumers; Ballard Spahr to hold April 13 webinar

Barbara S. Mishkin

The CFPB has issued its March 2017 complaint report that highlights credit card complaints.  The report also highlights complaints from consumers in Massachusetts and the Boston metro area.  On April 13, 2017, from 12:00 p.m. to 1:00 p.m.ET, Ballard Spahr will hold a webinar, “The CFPB’s Consumer Credit Card Market RFI and Other Important Recent Credit Card Developments.”  Click here for more information and a link to register.

General findings include the following:

  • As of March 1, 2017, the CFPB handled approximately 1,136,000 complaints nationally, including approximately 26,300 complaints in February 2017.
  • Debt collection continued to be the most-complained-about financial product or service in February 2017, representing about 30 percent of complaints submitted.
  • Debt collection complaints, together with complaints about credit reporting and student loans, collectively represented about 62 percent of the complaints submitted in February 2017.
  • Complaints about student loans showed the greatest month-over-month decrease, decreasing 51 percent from January 2017.  According to the CFPB, there was a spike in student loan complaints in January 2017 “around the time the CFPB took a major enforcement action against a loan servicer.”  At the same time, student loans had the greatest percentage increase based on a three-month average, increasing about 429 percent from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017).  In February 2016, the CFPB began accepting complaints about federal student loans.  Previously, such complaints were directed to the Department of Education.  As we have noted in blog posts about prior CFPB monthly complaint reports issued beginning in April 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increasing percentages represented by student loan complaints received by the CFPB most likely reflects the change in where such complaints are sent.
  • Payday loans showed the greatest percentage decrease based on a three-month average, decreasing about 286 percent from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017).  Complaints during those periods decreased from 399 complaints in 2015/2016 to 286 complaints in 2016/2017.  In the February 2017 complaint report, payday loans also showed the greatest percentage decrease based on a three-month average.
  • Montana, Georgia, Missouri, and South Carolina experienced the greatest complaint volume increases from the same time last year  (December 2015 to February 2016 compared with December 2016 to February 2017) with increases of, respectively, 53, 53, 39, and 39 percent.
  • West Virginia, Kansas, and New Hampshire experienced the greatest complaint volume decreases from the same time last year (December 2015 to February 2016 compared with December 2016 to February 2017) with decreases of, respectively, 6,  3, and 3 percent.

Findings regarding credit card complaints include the following:

  • The CFPB has handled approximately 116,200 credit card complaints since July 21, 2011, making credit cards the fourth-most-complained-about product, representing 10 percent of all complaints.
  • The most common issues identified in complaints involved billing disputes, particularly disputes involving fraudulent charges.  Consumers complained about the receipt of confusing guidance when notifying their credit card company of such charges and difficulty in having the charges removed even after receiving notice from the credit card company that the dispute was resolved favorably.
  • Consumers complained about problems with rewards programs, such as being unable to take advantage of benefits after meeting program requirements for such benefits and online information that contradicted information received from customer representatives.
  • Consumers complained about the terms of deferred-interest programs, including confusion as to how payments were applied to multiple balances.  Deferred-interest and rewards programs are among the topics on which the CFPB is seeking information in the RFI about the credit card market that it issued last month.
  • Consumers reported issues related to card issuance, such as unsolicited credit cards and problems arising in portfolio conversions from one lender to another.

Findings regarding complaints from Massachusetts consumers include the following:

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CFPB issues 2017 FDCPA report; Ballard Spahr to hold May 24 webinar

Stefanie Jackman

The CFPB has issued its fifth annual Fair Debt Collection Practices Act report covering the CFPB’s activities in 2016.

On May 24, 2017, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar to provide an update on debt collection developments.  Click here to register.

According to the report’s section on complaints, the CFPB handled approximately 88,000 debt collection complaints in 2016, which was 2,900 more than in 2015.  The most common complaint was about attempts to collect a debt that the consumer claimed was not owed.  The second and third most common complaint issues were, respectively, disclosures or providing information sufficient to verify the debt and communication tactics used when collecting debts.

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Some suggested questions for Director Cordray’s expected appearance at April 5 House hearing

Barbara S. Mishkin

On April 5, 2017, the House Financial Services Committee will hold a hearing, “The 2016 Semi-Annual Reports of the Bureau of Consumer Financial Protection Bureau.”  Since Director Cordray has appeared at all of the Committee’s prior hearings on CFPB semi-annual reports, it is reasonable to expect him to appear at this hearing even though the Committee’s website does not yet identify any witnesses.  His appearance would represent Director Cordray’s first Congressional appearance since President Trump’s inauguration. 

Early last month, Director Cordray was interviewed by CNBC.  We commented that the interview was more noteworthy for what it failed to cover than for what it did cover and listed a number of important questions he was not asked.  We think several of those questions and some others would be appropriate for Committee members to ask Director Cordray at the April 5 hearing.  Committee members might consider asking: 

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