Many consumers don’t realize that the money they owe a merchant or some other creditor is an asset that might be sold to another company. And this company might then sell their debt to yet a third company, either by itself or as part of a large package of debts. Now, no one involved in the sale has to tell consumers when their debts are sold or resold. So, a consumer who has fallen behind in payments could be contacted by a debt collector working for a debt owner the consumer has never heard of. The consumer might be confused about where the debt is from and who he/she must pay.
CFPB wonders if there should be a new rule that consumers must be told when their debts are sold. (If the debt is a home mortgage, federal law already requires this. The notice must tell the consumer when to start sending payments to the new company and how to contact someone there.)
- Current practice: Do sellers or buyers of debts typically tell consumers when their debt is sold? If so, what information do consumers get and how do they get it?
- Benefits: How would getting notice help consumers? (Be as specific as possible).
- Costs: What expense or problems would debt sellers or buyers have with giving notice? Would these be different for different kinds of debt (credit card, automobile, medical, etc.) or different kinds of debt buyers or sellers? (Be as specific as possible).
- New rule: What information should be in such a notice? Should the notice have to be sent by the seller, or the buyer of the debt?