Debt

Activities to Combat Illegal Debt Collection Practices

In March 2018, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) reported on their 2017 activities to combat illegal debt collection practices.  The CFPB handled approximately 84,500 debt collection complaints, making it one of the most prevalent topics of complaints about consumer financial products or services.  The Bureau offered five sample letters that consumers may use when they interact with debt collectors.

The FTC resolved 10 cases against 42 defendants and obtained more than $64 million in judgements, focused on curbing egregious debt collection practices, including phantom departments, schools, non-profit organizations, banks, credit unions, other businesses and government agencies.  The agency logged more than 60 million views on its webpages, with its videos seen more than 581,000 times at YouTube.com/FTC, and its consumer blogs reaching 199,860 (English) and 50,480 (Spanish) email subscribers.

For more information, click here.

Teaching Suggestions

  • Ask students to review the major provisions of the Fair Debt Collection Practices Act.
  • Let students debate the issue, “Can governmental agencies stop unlawful practices of the debt collection agencies that harm both consumers and legitimate business”.

Discussion Questions

  1. Is it possible to live without using any form of consumer credit?
  2. What can the governmental agencies do to protect the legal rights of all consumers in a manner that is efficient, effective, and accountable?
Categories: Chapter 5, Debt | Tags: , | Leave a comment

How to Dig Out of Debt? Grab More Than One Shovel

Millions of Americans are dealing with debt overload every day.  If you’re struggling to pay your loans, credit cards or other bills, here are some steps you can take to begin managing your debt problems.

  1. Create a budget.
  2. Try to get a clear picture of your monthly income and expenses.
  3. Contact your creditors about easier ways to make your most important bill payments.
  4. Have a strategy for saving money on interest and fees.
  5. Consider getting help from a reputable credit counselor.
  6. Know your rights if a debt collector contacts you.

For more information, click here.

Teaching Suggestions

  • Have students debate this issue “Is it possible to live without using any form of consumer credit”.
  • Ask students if they have created a budget, borrowed to finance a car, and have a strategy for saving money on interest or fees.

Discussion Questions

  1. What factors should be considered when a person is determining the amount of credit he or she should take on?
  2. What actions are commonly recommended if a person has difficulty making credit payments?
Categories: Chapter 5, Debt | Tags: | Leave a comment

Know your debt collection rights

Know someone who’s behind on their bills? Maybe debt collectors are calling for payment? The Federal Trade Commission’s new debt collection video can help you understand your legal rights – and may lower your stress level.  In the video, you’ll see how bad debt collectors try to get you to pay up. Bad debt collectors will say anything to get you to pay – and they’ll make it feel urgent to get you to pay immediately. But there are laws to protect you. Debt collectors:

  • Can’t call you before 8 a.m. or after 9 p.m.
  • Can’t use profanity, threaten violence or harass you to pay
  • May not lie or pretend to be someone they’re not
  • Cannot ask you to pay a debt that doesn’t even exist
  • Can’t threaten you with arrest or deportation
  • Cannot tell anyone – except your spouse or attorney – about your debt

If a debt collector calls and uses any of these tactics, hang up and report it to the FTC. Remember: you have the right to be treated fairly – no matter what.

For more information go to: consumer.gov/debt.

To view the video, click here.

Teaching Suggestions

  1. Ask students to summarize the steps they may take if a debt collector calls.
  2. Let students make a list of danger signals of potential debt problems.

 Discussion Questions 

  1. Which federal law regulates debt collection activities and protects consumers from abusive collection practices?
  2. Does the law erase the legitimate debts consumers owe?
Categories: Chapter 5, Consumer Complaints, Debt | Tags: , | Leave a comment

Phantom Debt Collectors

Consumers across the country report that they’re getting telephone calls from people trying to collect loans the consumers never received or on loans they did receive for amounts they do not owe.  Others are receiving calls from people seeking to recover on loans consumers received but where the creditors never authorized the callers to collect them.

The FTC is warning consumers to be alert for scam artists posing as debt collectors.  It may be hard to tell the difference between a legitimate debt collector and a fake one.

A caller may be a fake debt collector if he/she:

  • is seeking payment on a debt for a loan you do not recognize;
  • refuses to give you a mailing address or phone number;
  • asks for personal financial or sensitive information; or
  • exerts high pressure to try to scare you into paying, such as threatening to have you arrested or to report you to a law enforcement agency.

For more information, click here.

Teaching Suggestions

  1. Ask students to make a list of protections provided by the Fair Collection Practices Act.
  2. Ask students to prepare a list of steps they should take if the harassment continues.

Discussion Questions

  • If you think that a caller may be a fake debt collector, why is it important to ask the caller for his name, company, street address, or telephone number?
  • If you think that a caller may be a fake debt collector, should you stop speaking with the caller? Why or why not?
Categories: Chapter 5, Debt, Frauds and Scams | Tags: , , | Leave a comment

Overhauling Debt Collection Market

New Protections Would Limit Collector Contact and Help Ensure the Correct Debt is collected

The Consumer Financial Protection Bureau (CFPB) is considering to overhaul the debt collection market by capping collector contact attempts and by helping to ensure that companies collect the correct debt.  Under the proposals being considered, debt collectors would be required to have more and better information about the debt before they collect.  As they are collecting, companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt.  When responding to disputes, collectors would be prohibited from continuing to pursue debt without sufficient evidence.  These requirements and restrictions would follow the debt if it were sold or transferred.

For more information about the proposals under consideration, click here.

Teaching Suggestions

  • Ask students what federal laws already prohibit debt collectors from harassing, oppressing, or abusing consumers.
  • Ask students if they, their friends or relatives, have ever been harassed by creditors. If so, what were their experiences?

Discussion Questions

  1. Debt collection market generates more complaints to the Consumer Financial Protection Bureau than any other financial product or service. Why?
  2. What might be some common complaints against debt collectors seeking to collect debt from consumers?
Categories: Chapter 5, Debt, Financial Planning | Tags: , | Leave a comment

BAM banned from debt collection

In late July 2016, filed as part of Operation Collection Protection, the Federal Trade Commission (FTC) charged that BAM Financial used lies, threats, intimidation, and other illegal practices to extract payments from consumers.  When obscene language, incessant calls, and harassment of family members didn’t get the results they wanted, the defendants got personal.  For instance, the defendants told the parent of one purported debtor “No wonder your daughter is in such predicament with a mother like you.”  The FTC alleges that they falsely stated to another consumer’s 84-year-old mother that they had a warrant for her daughter’s arrest and later told the consumer they were bounty hunters.

The FTC says BAM’s letters and phone calls were riddled with false threats of litigation.  The complaint also charged that in numerous instances, the defendants didn’t follow up within five days of their initial communications with proper validation notices as the law requires.

The settlement with BAM Financial, Everton Financial, Legal Financial Consulting, Luis O. Carrera, and Robert Llaury bans them for life from debt collection agency industry.

For more information, click here.

Teaching Suggestions

  • Ask students what consumer rights they have when dealing with debt collection agencies.
  • Ask students to list important provisions of the Fair Debt Collection Practices Act.

Discussion Questions

  1. Nearly 30 million Americans have their accounts in collection, and debt collectors make as many as one billion contacts with people every year. Are these contacts legal?
  2. What types of debts are covered under the Fair Debt Collection Practices Act?
  3. How can you stop a debt collector from contacting you?
Categories: Chapter 5, Consumer Complaints, Debt, Frauds and Scams | Tags: , | Leave a comment

Paying for College

It’s more important than ever for students and former students to make smart decisions about financing their college education.  Whether you are attending college soon, are a current student, or already have student loans, Consumer Financial Protection Bureau has put together some tools and resources to help you make the best decisions for you.

If you are considering student loans to help pay for school, you not alone—many students need loans to cover their full cost of attendance.  If you have to take out student loans, comparing your options can help you find the student loan best suited for your needs.

Consumer financial Protection Bureau has prepared student financial guides, financial aid shopping sheet adopted by more than 500 colleges and universities, and other helpful information on its website.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog and the original sources to

  • Help students appreciate that the Consumer Financial Protection Bureau overseas private lenders, debt collectors, and loan services that manage borrowers’ payments and billings.
  • Describe why one-in-four student loan borrowers are past due or in default on a student loan.

Discussion Questions

  1. When borrowers default on a student loan, what might be some adverse consequences on their credit?
  2. Do you believe the student loan market lacks consistent standards that cover the servicing of all private and federal student loans?
  3. What can the federal and state governments to protect consumers in this market?
Categories: Debt, Wise Shopping, _Appendix A | Tags: , , | Leave a comment

Fraudulent Debt Relief Operation

The Federal Trade Commission (FTC) has charged a debt relief company with falsely representing to financially distressed homeowners and student loan borrowers that it would help get their mortgages and student loans modified.  At the FTC’s request, a federal court has temporarily halted the operation.  The FTC seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers.

According to the FTC’s complaint, Good EBusiness LLC deceptively marketed home loan modification services and illegally charged an advance fee of 1,000 to $5,000.  The agency alleges that the company falsely claims that it can lower monthly mortgage payments, reduce mortgage interest rates usually within a few months, and falsely promise full refunds if they fail.  The FTC’s complaint also alleges that Good EBusiness, using the names Student Loan Help Direct and Select Student Loan; Select Student Loan Help LLC; Select Document Preparation Inc.; illegally charged a fee of $500 to $800 for student loan relief services.

For more information, click here.

Teaching Suggestions

  • Ask students to make a list of sources they may rely on for help when they are overburdened with debt problems.
  • What questions should you ask in finding the best credit or debt counselor?

Discussion Questions

  1. Which federal consumer credit law regulates debt collection practices and what are its major provisions?
  2. What options of solving credit and debt problems are available to individuals?
Categories: Chapter 5, Debt, Frauds and Scams | Tags: , | Leave a comment

Beware of Illegal Student Debt Relief Schemes

In March 2016, the Consumer Financial Protection Bureau requested a federal court to shut down a student debt relief company that charged borrowers millions of dollars in illegal upfront fees and for federal student loan services.  The court order would also require the company, Student Loan Processing.US, to pay refunds to thousands of harmed consumers and civil money penalty.  If the proposed judgement is entered by the court, the company must:

  • Shut down illegal operations: Student Loan Processing.US must shut down all operations within 45 days of the entry of the court’s judgement.
  • Cancel all contracts with consumers and stop charging them.
  • Pay consumer refunds.
  • Stop participating in the debt relief and student loan industries.
  • Ensure student loan borrowers do not miss important repayment benefits.
  • Pay a civil penalty.

For more information, click here.

Teaching Suggestions

Discussion Questions

  1. How can you protect yourself from companies engaged in deceptive marketing practices, or otherwise violate federal consumer protection laws?
  2. Is it possible for government agencies to permanently shut down companies that defraud consumers?
Categories: Debt, _Appendix A | Tags: | Leave a comment

Newcomer Money Guides

While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions.  These guides offer brief suggestions to those who are new to the U.S. banking system.  The guides also include guidance for submitting and resolving problems with a financial product or service.

The Newcomer Guides include these topics:

  • Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
  • Checklist for opening an account, to assist with starting a bank or credit union account.
  • Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
  • Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.

Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.

For additional information on money guides for newcomers:

Article #1
Article #2
Article #3

Teaching Suggestions

  • Have students ask people to create a list of financial planning terms that people find confusing.
  • Have students suggest methods to have people learn about confusing financial planning terms.

Discussion Questions 

  1. What financial problems might be encountered by people with limited English-language skills?
  2. What actions might be taken to assist various groups to better understand banking services and money management activities?
Categories: Bank Fees, Budget, Chapter 2, Chapter 4, Credit Cards, Debit Cards, Debt, Financial Services, Savings | Tags: , , | Leave a comment

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