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Proposed laws would reign in debt collectors for federal agencies

On Behalf of | Nov 6, 2015 | Consumer Protection

In an earlier post we wrote that collection agencies must adhere to a strict code of rules. When they do not, they could find they are paying the debtor monetary damages. Readers may be surprised to learn however, that much of the time debt collectors hired by federal governmental agencies are not held to that same standard. As a result, people who are in collections for things as minor as unpaid speeding tickets might find they are being intimidated and harassed by debt collectors seeking to recoup the amount owed. 

Recently a couple of state senators took action to change that practice. They presented the Stop Debt Collection Abuse Act. Among other things the proposed legislation seeks to limit fees charged by debt collectors hired by federal agencies, to 10 percent. This is important because in some cases it is possible the fees charged by the debt collectors could be much more than the amount seeking to be recovered.

Another objective of the proposed legislation is to prevent collectors from making false claims, misrepresenting amounts owed and threatening or harassing debtors.

This may be just the tip of the iceberg. One of the lawmakers behind the bill indicated he is calling for a study to be conducted that looks into the debt collection practices being followed throughout the nation on the local level. Specifically the Government Accountability Office is focusing on debt collectors hired by local and state agencies. Depending on what is uncovered, it is possible that additional legislation could be offered.

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