At a joint FTC-CFPB Roundtable, many participants supported uniform national standards for the kinds of information about a debt that must be transferred to a debt buyer or collector. (See 2013 FTC-CFPB Roundtable.) Not having accurate and complete information can harm consumers, debt owners, and collectors if it leads to collection efforts against the wrong person or for the wrong amount. (See 2009 FTC Modernization Report, p. 21-24.) But people had different ideas about what specific information should be included.
As a first step in thinking about uniform standards CFPB is looking for information about what's happening now:
When debts are sold: What kinds of information are typically transferred now to debt buyers? Does it depend on the type of debt (for example: credit card, student loan, auto loan)? Does the sale price of a debt vary depending on how much information the seller provides? How about when buyers resell debts?
To and from collectors: What types of information do creditors typically make available to the collector when they put a debt into collection? What kinds of things do collectors learn while trying to collect the debt? Do they pass this information back to the debt owner?
Monitoring: Do debt sellers monitor what buyers do after the debt has been sold? Do owners monitor what happens to their debts in collection?
Comments15
Commenting is now closed.
josephusmyer
November 6, 2013 - 9:55am
To avoid consumers getting sued repeatedly on the same debt, the CFPB should require or encourage states to adopt rules requiring that judgments be preclusive of future consumer-collector litigation on the same debt; instead, if there is a dispute between assignees as to who has title to the debt, they should work it out between themselves instead of risking subjecting the consumer to multiple liability.
rb
November 6, 2013 - 12:20pm
Absolutely and it should be the kind of information this is admissible in a court of law.
From_ill_annoy
November 6, 2013 - 1:59pm
More information does not help when lawyers refuse to perform even the most basic due diligence as required before they affix their signature to, and, submit court paper (whichh are legal affidavits) to Clerks. As it stands now, most judges will not hear motions for sanctions under rule 137, and most lawyers will not file motions for sanctions against their colleagues. However, some mechanism has to created to give power back to those wrongly accused of owing debt, such that there are serious consequences for lawyers who recklessly abuse the court process and harm the personal and professional reputations of innocent citizens.
Moderator
November 6, 2013 - 2:32pm
CFPB can't regulate general rules of practice for attorneys. Under the FDCPA, they can issue rules prohibiting debt collectors from using “false, deceptive, or misleading representation or means in connection with the collection of any debt” or “unfair or unconscionable means to collect or attempt to collect any debt.” One of the principal purposes for the validation notice, under the FDCPA, was to “eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid" (See the ANPRM Validation Notices, Disputes, and Verifications (Section 809 of the FDCPA)). See also the post on the "validation notice" sent to consumers.
RBell
November 6, 2013 - 6:35pm
I would suggest a review of the language already published in the Federal Rules of Bankruptcy BR 3001( effective date 12/1/2012) relating to documentation. Based upon my participation with the Rule and numerous comments/hearings, I believe some time can be eliminated without re-inventing a different set of standards. Bankruptcy involves collection and involves consumers including attorneys on both sides as well. I recommend another examination of the "validation" notice language and the litany of interpretations of the language. If the notice is sent and certainly should be, what happens if there is no response from the debtor? Can the debtor say the notice was not received and if the collector does not get a response after 30 days is this an admission the debt is valid?
Corrections130
January 12, 2014 - 8:29pm
Agreed the debt companies usually reply with improper validation and verification which is already in their computer.
Jane freese
November 7, 2013 - 11:18am
The price of paper (bad debt) varies depending on the collectability of the debt based on info known about the debtor and also varies based on the amount of documentation purchased from the original creditor. Most debt buyers only pay for a couple of recent credit card statements. They may provide a "bill of sale" but these never identify a specific account being sold and reference a master purchase contract which is never provided.
Deb27804
November 7, 2013 - 1:44pm
I work in healthcare and believe there should be standardization. I had to be readmitted for a medical problem, the result of a procedure gone bad and ended up with a hospital acquired condition. The result, a $110,000 hospital bill. After insurance, the physician agreed to write-off the balance. The hospital added insult to injury and pursued collections. Government payers do not reimburse for negligence nor is the beneficiary responsible.
Another issue. . . this has happened to me on a couple of occasions. In this instance, I had a MRI, received the insurance EOB and paid the balance. That should have been the end of it. Two plus years later I receive a notice for the balance, which should have been the contractual allowance. When I called the collection agency all they knew was that the MRI business had closed and turned my balance over to them as bad debt. They were able to see both the insurance and my payment. However, since they didn't have the insurance EOB, they suggested that I contact the insurance company and obtain a copy. Why is it the consumers responsibility to chase down information, it feels like I am doing their job. There should be standards for turning over collections to a agency. If the provider is going to send a bill to bad debt, they should have to supply a file the with all the information. In this case, the claim and itemization (1500 and/or UB) the insurance EOB and/or COB and all notes pertaining to the claim. Maybe having to provide all the required documentation would allow the provider review the claim to determine whether the balance is the patient's responsibility.
Moderator
November 17, 2013 - 4:43pm
Welcome to RegulationRoom, Deb 27804, and thank you for suggestion on what specific documents should be transferred to a new owner when a debt is sold. We hope you’ll visit our topic page on the validation notice send to consumers and comment on what information you believe consumers should receive from collectors.
DVD
November 20, 2013 - 3:40pm
I strongly believe when a lender sells a debt to a JDB, that payoffs or settlements made to the JDB will reflect payoff /settlement in the original lenders internal records.
Moderator
November 20, 2013 - 4:06pm
Thank you for commenting and welcome to RegulationRoom, DVD. It sounds like in your experience, it is common for a debt buyer to inform the original lender of payment or settlement. What do others think? Is this a common practice?
RBell
December 12, 2013 - 6:20pm
A recent case filed by the Colorado Attorney General in the District Court 11/25/2013 against four entities encompasses what is wrong from selling debt by two financial banks, to a debt buyer, and then collection by an agency and law firm on why oversight/rules/actions must take place and should have been in the past. Two important points. First the complaint is an allegation as of now. The second is the complaint isn't representative of the number of debt buyers and collection agencies/law firms in my opinion. It does reflect why rules must be established and enforced against those who do not conform to the laws and regulations. It also shows the need of better controls and due diligence by banks who sell accounts and be held accountable even though the accounts change ownership. It is long overdue to place accountability and responsibility to bad players, and include individuals who manage the enterprises from start to finish.
Jason
January 21, 2014 - 3:11pm
I am currently going through a miserable experience with a creditor and debt collector. In 2004 I completed my college education and consolidated all of my student loans through Nelnet. In 2005 (or so) I started to get calls from debt collectors stating that I was delinquent on my loan repayment. I explained the situation, that I had made all of my timely payments through Nelnet and, before I would pay anything else, I would need to see some proof of the debt. I never received any proof of the debt and this conversation reoccurred several times for the next five years.
In 2011 I wanted to buy my (wife’s) dream home. It was a significant purchase and the bankers I talked with indicated I needed to clear up the student loan issue to be approved. I reached out to the original creditor and the debt collector and begged for some proof of the loan. They then provided me with a loan application (nothing to indicate that the application was approved or that any funds were ever dispersed to me). While I was not comfortable with the proof, I knew that fighting it out in court would take longer than I was willing to take. So, I was very purposeful in my conversations with the original creditor and the debt collector to make sure that the issue would be cleared on my credit report if I paid the full value of the (alleged) loan. I also recorded the conversations I had with the original creditor and the debt collector.
I paid the original loan amount and (if you didn’t see this coming) the original creditor refused to update my credit report. And, even after providing the credit reporting agencies with proof that the debt was paid, they also refused to update my credit report.
To make matters worse, after the debt was paid, I received a notice from the debt collector that several thousands of dollars had been excused. I immediately contacted the debt collector and requested documentation that would support their amount due, including documentation where I agreed to a specific interest rate. No response from the debt collector.
So, I am now arguing it out with the IRS regarding any additional taxes that may be due. And, even though I paid the debt two years ago, my credit report has not yet been updated.
It is simply ridiculous than any business would have this much power to have such a negative impact on an individual without any documentation to back it up. Any creditor should be required to provide certain documentation prior to making a negative credit reporting and there should be significant consequences for any creditor/debt collector that pursues a debt without having the required documentation.
sbwaddell
January 30, 2014 - 4:48pm
Debt collectors call and cannot verify that the creditor has merged with another company. The debt may have written off the books of the acquired company. I propose that the CFPB implement a rule pertaining to debts written off by an acquired company and any additional stipulations on a timeframe to which an old debt can be collected only if the consumer has been validly notified that the debt has been sold to a debt collection agency; excluding the initial call from the DCA
Debt Neutrality Petition
February 1, 2014 - 2:16pm
Merging all types of debt collectors into the same introductory phrase is actually more confusing to the consumer than knowing the actual standing of the debt collector by how they introduce themselves.
Maybe it is time to better delineate who it is that is calling. Instead of the most commonly used phrase of "This is a Debt Collector calling"...
How about, "This is a Debt Collector calling on behalf of (name of credit card)...", OR, "This is a (name of credit card company) debt collector calling"...
Example, "This is a debt collector calling on behalf of a Bank of America debt...", or, if the debt collector is actually employed by Bank of America, "This is a Bank of America Debt Collector calling...".
And then there is the nuance of a debt that has or has not been sold to the first debt collector, perhaps whether the debt has been sold should be stated upfront as well.
Perhaps "This is a third party debt collector..." should be used for debt that has been sold twice, and so on.