Debt collection agencies are taking advantage of old legislation that allows them to cozy up to credit bureaus and potentially ruin consumers’ credit for old, paid debts.
Lawmakers, consumer advocates and even debt collection industry insiders are calling for reform because the 34-year-old federal law is broken and problematic for consumers.
“[Debt Collection Agencies] don’t abide by any rules,†said Richard Rubin, a New Mexico consumer-law attorney and an expert on the federal laws that govern credit reports and debt collectors, told the AP. “Their job is to squeeze money out of people, and their business model is to go as close to the edge as they can. And they do it with the complicity of the credit bureaus.”
While debt collection is a necessary part to maintaining fiscal health in the country, complaints of how debt collection agencies handle their business has shot up by 73 percent since the economy bottomed out in 2008.
Some consumers are being targeted for debts that have been paid or show no proof of being owed. Collection attempts can seriously damage the financial health of a consumer — making it difficult to refinance, buy a car or acquire credit.