Consumer advocates in California and around the country are concerned about a rule change finalized recently by the Consumer Financial Protection Bureau. The rule, which updates the 1977 Fair Debt Collection Practices Act, would allow debt collectors to contact borrowers by email and text message when they fail to make their monthly payments on time. The 653-page rule could go into effect a year after its publication in the Federal Register.
Unlimited texts and emails
While the rule change places a weekly limit on the number of times debt collectors can contact consumers by phone, it allows them to send as many emails and text messages as they wish. This worries groups like the nonprofit Americans for Financial Reform because about one in three American borrowers have at least one past due account and a disproportionate number of them have pay-as-you-go mobile plans that charge for each text received.
The CFPB has included at least some protections for consumers. Debt collectors must cease making phone calls when borrowers ask them to, and they must include opt-out information in every email and text message they send. Consumers can also stipulate how they wish to be contacted. The CFPB says an updated rule is necessary because the ways Americans communicate with each other have changed greatly in the more than four decades since the FDCPA was passed.
The automatic stay
Daily contact from debt collectors can make a difficult financial situation almost unbearable. Attorneys with debt relief experience could explain how filing for personal bankruptcy puts a swift end to this harassment. When a bankruptcy petition is filed, the court issues what is called an automatic stay. This orders creditors and debt collectors to cease all contact, halts debt-related lawsuits and ends wage garnishments, at least temporarily.