- 4 min read
- The most common debt collection complaints relate to the amount owed and the verification process.
- The most common areas of complaints are Medical debt, Credit Card debt and other (phone, health club, etc).
- Learn how to deal with debt collectors.
Debt Collection Complaints - Debt Verification and Debt Harassment
Falling behind on debt payments is stressful. Getting mail, faxes, phone calls from debt collectors is even more stressful. While there are laws and regulations that deal with the debt industry, many people find themselves either confused or harassed by debt collectors.
There are major differences between dealing with a debt collector from the original debtor (or someone working for them) and a third-party debt collector. As debt gets transferred from the creditor to a third-party debt collector, who often buys the debt for cents on the dollar, some of your information may be lost or changed in the shuffle.
Types of Debt Collection Complaints Collected by CFPB
The Consumer Finance Protection Bureau (CFPB) collects data about consumer complaints. Debt collection complaints is one of the most common complaint. The CFPB has collected over 182.000 complaints regarding debt collection. Their data organizes the complaints around product type (mortgage, student loan, auto loan, credit card, etc) as well as issues. Based on information collected between 2013-2017, here is a breakdown of complaints based on issues:
Some of the most common issues relate to whether debts are actually owed. Three categories account for more than 58% of all of the complaints: continued attempts to collect debt not owed, attempts to collect debt not owed, and disclosure verification of debt. Other important areas of complaints deal with the problem of how debt collectors communicate with the consumer, including communication tactics (15.5%), false statements or representation (8.2%), use or threat of an illegal action (6.9%)
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Debt Collection Complaints: Are They Real
It is very important to understand that the CFPB does not check to see if the complaint is valid, or what is the underlying problem. The ACA International: Association of Credit and Collection Professionals issued a report in January 2018 analyzing the CFPB complaint data for debt collectors. They point out that the actual number of complaints is actually a small percentage of the many interactions consumers have with debt collectors.
Three sub-product categories account for 68% of the total debt collection complaints: Other Debt (phone, health club, etc.), Credit Card Debt, and Medical Debt
The ACA report also points out that the major of complaints were centered around the amount owed and the verification process. This can be a real problem, due to the transfer of information from the original debtor to the third party. They also point out that,
...the most negative stereotypes about the debt collection industry, such as harassment or illegal practices, were the categories consumers selected the least and represent an exceptionally small number of responses. ..These data suggest that consumers are not complaining about harassing or harsh debt collection practices and that the majority of debt collectors are adhering to legal requirements and ethical guidelines.
Among some of the more common improper debt collector behaviour complaints were: Frequent or repeated calls, Threatened to take legal action, and Talked to a third party about my debt. For more details of the types of specific complaints check out the following pdf file.
Debt Collection Complaints: Learn Your Rights
There is no doubt that there are problems with the debt collection process. Some of those problems are caused by poor methods of recording debts and providing accurate information about the actual debt and debt history. Other problems relate to improper behaviour of certain unethical debt collectors.
In order to deal with debt collectors it is important that you:
Learn Your Rights: The Fair Debt Collection Practices Act was established to help protect you from unfair debt collection actions. Check out Bills.com article about the FDCPA for more information.
Verify Your Debt: Remember, the debt collector must be able to verify the debt. This seems to be one of the most common complaints. Check out Bills.com article about how to verify debt.
|More About Collection Agents|
|• Midland Credit Management • MRS Associates • Northstar Location Services • Portfolio Recovery Associates • Zwicker & Associates|
|Always validate a debt.|
Don’t Allow Harassment: A debt collector cannot harass you, for example, a debt collector may not threaten a consumer with arrest or criminal charges. If you feel that you are being harassed then you can file a complaint and/or write a Cease Communication Demand Letter.
Although you may think that your debt collector complaint is valid, there are many cases that the collection agency has the right to try to collect the debt. In that case you should be familiar with Collection Laws and rules regarding Statute of Limitations.
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Looking for ways to get out of debt? Worried about debt collectors? Check out Bills.com Debt Navigator to find a personalized debt relief solution.
Struggling with debt?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q3 2023 was $17.291 trillion. Auto loan debt was $1.595 trillion and credit card was $1.079 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in South Carolina, 37% have any kind of debt in collections and the median debt in collections is $2026. Medical debt is common and 22% have that in collections. The median medical debt in collections is $860.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.