The New Kid on the Block
In our Short Sale practice we find that many of our clients need protection from debilitating harassment both before the Short Sale closing and after. A few settled mortgage debts of our clients have been acquired by collection agencies, presumably for pennies on the dollar, and the collection agents often use aggressive tactics to intimidate a former Short Sale homeowner into paying a debt that has been forgiven and sometimes even imputed to the Seller as income by a 1099C from the Short Sale mortgage lender!
Now, the CFPB, only around for the past few years, wants to expand its bailiwick. Primarily inundated with complaints about mortgage loan modification scams, disappointing lender practices as to modifications and abuses of foreclosure, the CFPB now says they have the resources to expand their protections to consumers to assist them against abusive debt collectors.
Historically, the Fair Trade Commission (FTC) has been the primary governmental watchdog agency to help address violations of the Fair Debt Collection Practices Act (FDCPA). But now, debtors have a new ally: “The Consumer Financial Protection Bureau. The CFPB was set up to be the first federal agency solely focused on making consumers get a fair shake from financial firms. . . . including debt collectors. Recently the CFPB created five form letters consumers can use when dealing with debt collectors to make sure they are treated fairly.” If you are in debt and under siege from creditors, add this link to your list of favorites. You can find other references to great links throughout this blog which summarize your rights under the FDCPA. But what I like about the links in this article, they actually give you the tools to exercise your rights!
Debt collection defense is an area of the law that is under-served by attorneys. Aside from legal aid societies and legal clinics, it is very difficult for attorneys to make enough money to “feed the baby” by defending consumers against creditors. And how many debtors really want to pay a $500 retainer to get relief from one unscrupulous creditor trying to collect $1,000? This is an area of law where you need to learn to defend yourself. We often hold discounted consultations with potential abusive debt collection victims only to coach them on how to defend themselves. It is amazing how many collection agencies acquire debt to collect from creditors with no way to meet the minimum threshold requirement of justifying or giving an accounting on the debt. Knowing how to demand such an accounting and whether the information provided is sufficient is crucial knowledge for financial self-defense. Of course, there are plenty of cases where the best defense is just being able to say to a creditor: “Talk to my attorney! I have retained an attorney to help enforce the FDCPA and protect my rights. My attorney’s name and number is . . .”