I am concerned about the perception consumers have concerning older debts. With the knowledge that this legislation is both to improve debt collection practices (helping the credit industry) and to educate and protect consumers (to increase confidence and enforce their rights), this is especially relevent.
Many consumers appear to be under the impression, if they haven't managed to pay off the debt within the first initial years, they should *ignore* it until it falls off their credit report. Reviving the debt is the issue. Yet these consumers are not concerned about paying the debt off in full - they might be in much better financial standing now. They're concerned about how paying a debt affects their credit score.
I believe this should be concerning. If a debt is outstanding, and repying part (or all) of this debt actually would *worsen* a consumer's credit, it seems counter-intuitive.
It works both against the interests of creditors and debt collectors - and the interest of consumers who owe money on a debt.
I don't know of a viable solution, but I'm certain this is a concern which should be addressed.
If a consumer is notified that their debt has been sold, there should be a way to contact the original creditor to verify. (i.e. there should be a paper trail)
I see an opportunity for scam artists to claim that (as they are now) the consumer owes money to them and to pay off their debt immediately to the scam artist.
With a clear paper/electronic trail, the path a debt takes from creditor to collector to collector can be verified and authenticated for the consumer's peace of mind, and so the right party gets paid.
I'd believe explaining their debt in the way current legislation has revolving accounts explain debt (minimum payment required, time it would take to pay off the debt with minimum payments, how much they'd end up paying with interest and fees during that time) would be logical.
The idea is sound in principle, but as any technology geared towards convienance, there are risks against privacy encouraging identity theft.
Having creditors, collectors, and consumers come together "on the same page" regarding debt would be fantastic for everyone involved.
But any technology which accomplishes this needs to be very secure with very strict authentication requirements to ensure *only* the relevant parties can view information concerning the debt.
Otherwise, not only thieves would have access to this information - but also non-criminal third parties, who may never have learned of such information due to the protection of consumer privacy laws.
Knowledge of the debt and money owed would need to have the same level of security afforded to consumer reports and information within a consumer report (as defined in the FCRA).
As I had commented in subsection 5 in this topic, security would be paramound.
Since the weaknesses in current authentication practices financial institutions/others covered by FACTA and the FCRA are not within the scope of this legislation, it shouldn't be difficult to impose those same security standards on any centralized debt collection database.
Thank you. Please do not misunderstand me, however; I was talking about the general perception of debt in the eyes of consumers.
(I have no personal experiences with debt to speak of, only my experiences working with victims of identity theft who have fraudulent debts; which is a horse of a different color.)
Consumers are not educated about how debt collection and revival works. The issue in the end isn't the mechanics, or if they can request the debt not be reported.
The issue is that, the way things stand now, it is not clear how repaying a debt will improve their score. It is not clear that they can ask for the collector not to report the debt payment if the debt is older than seven years. Consumers are confused and have these inaccurate perceptions because things are not clear.
Again, it is the perception which concerns me - it would benefit both creditors and consumers if it was plain and clear, in language the average consumer could understand, that paying off a debt is a good thing.
hjsthomas
1
I am concerned about the perception consumers have concerning older debts. With the knowledge that this legislation is both to improve debt collection practices (helping the credit industry) and to educate and protect consumers (to increase confidence and enforce their rights), this is especially relevent. Many consumers appear to be under the impression, if they haven't managed to pay off the debt within the first initial years, they should *ignore* it until it falls off their credit report. Reviving the debt is the issue. Yet these consumers are not concerned about paying the debt off in full - they might be in much better financial standing now. They're concerned about how paying a debt affects their credit score. I believe this should be concerning. If a debt is outstanding, and repying part (or all) of this debt actually would *worsen* a consumer's credit, it seems counter-intuitive. It works both against the interests of creditors and debt collectors - and the interest of consumers who owe money on a debt. I don't know of a viable solution, but I'm certain this is a concern which should be addressed.
View this comment in the discussion thread
hjsthomas
2
If a consumer is notified that their debt has been sold, there should be a way to contact the original creditor to verify. (i.e. there should be a paper trail) I see an opportunity for scam artists to claim that (as they are now) the consumer owes money to them and to pay off their debt immediately to the scam artist. With a clear paper/electronic trail, the path a debt takes from creditor to collector to collector can be verified and authenticated for the consumer's peace of mind, and so the right party gets paid.
View this comment in the discussion thread
hjsthomas
3
I'd believe explaining their debt in the way current legislation has revolving accounts explain debt (minimum payment required, time it would take to pay off the debt with minimum payments, how much they'd end up paying with interest and fees during that time) would be logical.
View this comment in the discussion thread
hjsthomas
4
The idea is sound in principle, but as any technology geared towards convienance, there are risks against privacy encouraging identity theft. Having creditors, collectors, and consumers come together "on the same page" regarding debt would be fantastic for everyone involved. But any technology which accomplishes this needs to be very secure with very strict authentication requirements to ensure *only* the relevant parties can view information concerning the debt. Otherwise, not only thieves would have access to this information - but also non-criminal third parties, who may never have learned of such information due to the protection of consumer privacy laws. Knowledge of the debt and money owed would need to have the same level of security afforded to consumer reports and information within a consumer report (as defined in the FCRA).
View this comment in the discussion thread
hjsthomas
5
As I had commented in subsection 5 in this topic, security would be paramound. Since the weaknesses in current authentication practices financial institutions/others covered by FACTA and the FCRA are not within the scope of this legislation, it shouldn't be difficult to impose those same security standards on any centralized debt collection database.
View this comment in the discussion thread
hjsthomas
6
Thank you. Please do not misunderstand me, however; I was talking about the general perception of debt in the eyes of consumers. (I have no personal experiences with debt to speak of, only my experiences working with victims of identity theft who have fraudulent debts; which is a horse of a different color.) Consumers are not educated about how debt collection and revival works. The issue in the end isn't the mechanics, or if they can request the debt not be reported. The issue is that, the way things stand now, it is not clear how repaying a debt will improve their score. It is not clear that they can ask for the collector not to report the debt payment if the debt is older than seven years. Consumers are confused and have these inaccurate perceptions because things are not clear. Again, it is the perception which concerns me - it would benefit both creditors and consumers if it was plain and clear, in language the average consumer could understand, that paying off a debt is a good thing.
View this comment in the discussion thread