With increased and onerous liability for making calls and sending letters to debtors, creditors and debt buyers have had little option but to file suit rather than repeatedly attempt to contact an uncooperative or uncommunicative debtor. Most complaints provide adequate and identifying information about the debt. In my experience, most debtors don't feel taken advantage of by lawsuits, they simply understand they owe the debt so there is little point in filing an answer or taking time to appear in court. In fact, the vast majority never respond to a Federal Law letter inviting them to dispute the debt. Filing suits and appearing in court is expensive and time consuming for creditors and debt buyer, but there is little alternative, nor should there be as these matters have always been governed appropriately by State law and State judges. As more credit is granted (and the US is a credit ecomony - over 70% of our economy is based on consumer spending which comes mainly from credit extensions and not consumers pay increases), there are simply more defaults, particularly in a Great Recession. Any heavy handed Federal regulation will hamper and restrict credit granting and debt buying, both of which are needed by the economy and the credit industry. While credit grantors should should make their documentation retention systems more accessible and share more documents upon a sale of accounts, a lack of documentation should not hamper State court lawsuits when a debtor offers no dispute so long as the account is adequately identified in a complaint. In Michigan, efforts to "make it more likely that consumers would defend themselves" have fell very flat for the reasons mentioned above. As it has always been, the protections are in place and are used by those debtors that wish to avail themselves of them. Judges are there to listen. However, most debtors (bless them) understand they simply owe the debt.
I appreciate Mr. Bartmann's comments but they appear to be grounded in a collection agency perspective (there is always business and market share tension between collection agencies and law firms). The reality is that (and this was voiced by other participants) many (not all but many) debtors simply won't/can't pay until they have to. To get to the Moderator's question as to what the CFPB can do to make it easier for debt collectors and consumers to settle accounts before litigation, I make these comments: The FDCPA and TCPA have truly made communications with debtor both difficult and hazardous for the collector. For instance, the fact that you can't safely leave a voice message for a debtor should be very troubling. At what point are privacy concerns (real and imagined) driven roughshod over basic communications with people in the 21st century? Over the years, our firm has stopped initial outbound calling (responding only to inbound calls) and also limited our pre-suit letters to just two. We send the required disclosure letter and (there being no response and the account reviewed for suit) then send a discounted payment offer that says we are going to file suit but would rather settle. We offer reasonable terms to the debtors to avoid a costly suit but the response rate is absolutely miserable, probably in the single digits percentage wise. Believe me, suits are time consuming and expensive, but they are often simply the only option. Even when the debtors are served, few contact us, and even fewer when the court sends them the judgment. Worse, a judgment doesn't guarantee payment on the account. So, what can be done? Clarification via Regulations as to what we can say and do in communications would at least promote more communication between the parties. With that, perhaps more points of contact could resolve debts before suit. I strongly disagree that litigation should be "discouraged" as it is not only a simple reality in much of debt collection but a fundamental right of a creditor. However, I think Regulations making it clear what can and cannot be done in communications that can shield the industry from the wild west of FDCPA and TCPA lawsuits would greatly encourage more communication. I also think a reasonable, good faith attempt to resolve the case (offering a payment plan and/or lump sum) before suit is filed is still a good idea as well even though our own response rate has not been great. Anything more will infringe on a creditor's rights and interfere with state law. Perhaps the CFPB Portal could have a debt resolution aspect to it where a debtor could try to resolve an account in a "safer" more disarming manner. Thank you for allowing me to make these comments.
WLF
1
With increased and onerous liability for making calls and sending letters to debtors, creditors and debt buyers have had little option but to file suit rather than repeatedly attempt to contact an uncooperative or uncommunicative debtor. Most complaints provide adequate and identifying information about the debt. In my experience, most debtors don't feel taken advantage of by lawsuits, they simply understand they owe the debt so there is little point in filing an answer or taking time to appear in court. In fact, the vast majority never respond to a Federal Law letter inviting them to dispute the debt. Filing suits and appearing in court is expensive and time consuming for creditors and debt buyer, but there is little alternative, nor should there be as these matters have always been governed appropriately by State law and State judges. As more credit is granted (and the US is a credit ecomony - over 70% of our economy is based on consumer spending which comes mainly from credit extensions and not consumers pay increases), there are simply more defaults, particularly in a Great Recession. Any heavy handed Federal regulation will hamper and restrict credit granting and debt buying, both of which are needed by the economy and the credit industry. While credit grantors should should make their documentation retention systems more accessible and share more documents upon a sale of accounts, a lack of documentation should not hamper State court lawsuits when a debtor offers no dispute so long as the account is adequately identified in a complaint. In Michigan, efforts to "make it more likely that consumers would defend themselves" have fell very flat for the reasons mentioned above. As it has always been, the protections are in place and are used by those debtors that wish to avail themselves of them. Judges are there to listen. However, most debtors (bless them) understand they simply owe the debt.
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WLF
2I appreciate Mr. Bartmann's comments but they appear to be grounded in a collection agency perspective (there is always business and market share tension between collection agencies and law firms). The reality is that (and this was voiced by other participants) many (not all but many) debtors simply won't/can't pay until they have to. To get to the Moderator's question as to what the CFPB can do to make it easier for debt collectors and consumers to settle accounts before litigation, I make these comments: The FDCPA and TCPA have truly made communications with debtor both difficult and hazardous for the collector. For instance, the fact that you can't safely leave a voice message for a debtor should be very troubling. At what point are privacy concerns (real and imagined) driven roughshod over basic communications with people in the 21st century? Over the years, our firm has stopped initial outbound calling (responding only to inbound calls) and also limited our pre-suit letters to just two. We send the required disclosure letter and (there being no response and the account reviewed for suit) then send a discounted payment offer that says we are going to file suit but would rather settle. We offer reasonable terms to the debtors to avoid a costly suit but the response rate is absolutely miserable, probably in the single digits percentage wise. Believe me, suits are time consuming and expensive, but they are often simply the only option. Even when the debtors are served, few contact us, and even fewer when the court sends them the judgment. Worse, a judgment doesn't guarantee payment on the account. So, what can be done? Clarification via Regulations as to what we can say and do in communications would at least promote more communication between the parties. With that, perhaps more points of contact could resolve debts before suit. I strongly disagree that litigation should be "discouraged" as it is not only a simple reality in much of debt collection but a fundamental right of a creditor. However, I think Regulations making it clear what can and cannot be done in communications that can shield the industry from the wild west of FDCPA and TCPA lawsuits would greatly encourage more communication. I also think a reasonable, good faith attempt to resolve the case (offering a payment plan and/or lump sum) before suit is filed is still a good idea as well even though our own response rate has not been great. Anything more will infringe on a creditor's rights and interfere with state law. Perhaps the CFPB Portal could have a debt resolution aspect to it where a debtor could try to resolve an account in a "safer" more disarming manner. Thank you for allowing me to make these comments.
View this comment in the discussion thread