New FTC regulations concerning the manner in which debts are collected have given many consumers hope that they will escape from old debts. Because there have been a few abuses in the industry, collection portfolio companies are being painted with a broad brush as overly aggressive. In fact, many reputable collection agencies are operating well within the established guidelines. Unless you have a legitimate dispute that the account being collected is not yours, the new guidelines are unlikely to relieve you of responsibility for the debt.
New Regulations
One of the new regulations requires that collection agencies have documentation that provides details of the debt before they initiate legal proceedings. Some agencies welcome this change. They seem eager to pursue a more open and transparent method that not only satisfies the original creditor, but helps the consumer solve his or her debt issues. In addition, many collection agencies would prefer to avoid legal proceedings completely.
While it is not a requirement that the original creditor provide the supporting documentation for each debt sold, agencies that purchase the debts place higher value on those that can. Al Brothers, CEO and owner of Cavalry Portfolio Services tells ARM in an interview that he expects this trend to continue and to have one of the most significant impacts on debt purchasing in the coming years. Current initiatives to tighten the practices related to debt buying will bring the industry under greater scrutiny, but will also place reputable companies, like Cavalry Portfolio, in a stronger position to function effectively.
The Majority of Debts
Although it is the big abuses that make headlines, the majority of debts in a portfolio are legitimately owed receivables. While a few exceptions make headlines, the majority of debts being pursued are real, and the documentation exists to justify their collection. And they add up to big problems for companies in an economy that has everyone struggling to stay afloat. Consumers who get lured in by promises of action against a debt collection company are likely to be disappointed, and worse, to delay the resolution of their debt.
In The End
In the end, the most reasonable course of action is to resolve legitimate debts. Entering a credit agreement is a contract. A consumer receives a good or service in exchange for a promise to pay. When the consumer defaults on that promise, companies are well within their rights to take action to collect payment. The new regulations will not limit the ability of creditors to pursue these legitimate debts.
Jessica writes about a wide variety of topics. She especially enjoys writing about debt. You can learn more about Cavalry Portfolio at http://www.cavalryportfolioservices.com/