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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CFPB highlights impact of student debt on communities of color

John L. Culhane, Jr.

In a new blog post, the CFPB states that recent research “underscores the disproportionate impact of student debt on communities of color.”  According to the CFPB, federal government data shows that over 90 percent of African-American and 72 percent of Latino students leave college with student loan debt, compared to 66 percent of white students and 51 percent of Asian-American students.  The CFPB also states that while Asian-American students may be less likely to have federal student loans, separate research has shown that Asian-American students who need to borrow more than $ 30,000 may be more likely to rely on private student loans offering fewer borrower protections.

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CFPB Community Bank Advisory Council to meet Sept. 29

Barbara S. Mishkin

The CFPB has published a notice in the Federal Register announcing that a meeting of its Community Bank Advisory Council (CBAC) will be held on September 29, 2016.

The notice indicates that the CBAC will discuss youth financial capability and debt collection.  Presumably, the CFPB will discuss the report it issued last week on achieving youth financial capability and seek input from CBAC members on the debt collection proposals it is considering, which it outlined in July 2016 in anticipation of convening a SBREFA panel.


CFPB Monitor

Fansteel, Inc. and Subsidiaries Wellman Dynamics Corporation and Wellman Dynamics Machinery & Assembly Inc. File for Chapter 11 of the United States Bankruptcy Code

CRESTON, Iowa, Sept. 15, 2016 /PRNewswire/ – Fansteel, Inc. and subsidiaries Wellman Dynamics Corporation and Wellman Dynamics Machinery & Assembly Inc. (, a leading manufacturer of precision engineered cast components for the global aerospace, defense, and…

PR Newswire: Bankruptcy

CFPB enters into consent order with for-profit college owner

John L. Culhane, Jr.

The CFPB announced that it has entered into a consent order with Bridgepoint Education, Inc., the owner of two for-profit colleges, to settle charges that the company’s representatives engaged in deceptive acts or practices by misrepresenting the potential costs of loans offered directly by the company to students.  The consent order requires the company to provide approximately $ 23.5 million in consumer relief in the form of loan forgiveness and refunds, and to pay an $ 8 million civil money penalty to the CFPB.  In its press release, the CFPB stated that its investigation was assisted by the California Attorney General and the Department of Education.

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