January 2021 - Consumers Beware: Debt Collection Rules are About to Change

Anyone who’s ever been contacted by a debt collector knows the stress those phone calls evoke. Imagine if the calls were followed by emails, text messages and even private posts via social media. That’s what consumers can expect as the result of a recent Consumer Financial Protection Bureau (CFPB) ruling.

About 70 million people, or one out of every four consumers, have a debt in collection at any given time, according to the National Consumer Law Center. The business shutdowns and work furloughs of 2020 can only increase that statistic.

Currently, the law allows debt collectors to contact consumers only by phone and regulates the number of calls and hours during which they can be made. The new ruling, effective October 31, also allows for unlimited emails, texts, and private social media messages. While consumers can opt out of receiving electronic messages, the details of how have yet to be announced.

• Verify the debt – The Fair Debt Collection Practices Act of 1977 gives you the right to know who the original creditor is and how the debt total was calculated.
• Beware of “zombie” debt – New Jersey’s statute of limitations for most debt is six years. By making a payment on expired debt, you revive the debt (a.k.a. ‘zombie’ debt) and your responsibility for it.
• Protect sensitive information – Don’t reveal personal information (i.e., social security number, birth date, bank and/or credit card numbers) until you verify the debt and are setting up a repayment plan.
• Check credit reports – Look for accidental errors (i.e., debts incurred by someone with the same name, or paid debts not properly recorded), and evidence of identity theft whereby someone opened accounts or took out loans in your name.
• Negotiate – Explore the possibility of settling for a lower amount of debt that you can afford to repay.
• Automate repayments – Automated payments can help you meet your obligations but be aware of any renewal terms that may apply.

Hiding from debt never works; but do ensure you’re only paying what you owe.