New rule bolsters debt collectors’ ability to contact you

The Consumer Financial Protection Bureau (CFPB) was created to protect consumers after the 2008 financial crisis. However, the agency has approved a rule allowing debt collectors new avenues to contact you over past-due balances.

Under the ruling, collection agencies can harass you not only over the phone but by text, email and even over social media, such as Facebook, Twitter and Instagram. The rule takes effect Oct. 30, 2021, updating a 43-year-old law limiting these interactions.

Ruling expected to have widespread impact

The CFPB’s decision could affect one out of every four American adults. That’s 70 million people estimated to be the target of bill collectors at any given time. The National Consumer Law Center (NCLC) says 18 million of those individuals have more than one bill in collections.

Consumer advocates worry it will result in millions being spammed by calls, texts and emails during a stressful time. While not taking effect for one year, it’s expected that many households could still be reeling from the financial impacts of the current crisis brought on by the pandemic.

The decision provides some protections for consumers

The rule is expected to hit communities of color more harshly. Consumer Reports says research shows nearly half of all people with debt in collections are Black or Hispanic, while 27% are white. The NCLC notes some protections are included in the rule, such as:

  • Consumers may designate one media, such as texts, off-limits to debt collectors
  • Debt collectors must provide instructions on how to opt-out of emails, texts or phone calls

Bankruptcy provides immediate relief from debt collectors

While some consumers are able to work with creditors to find a way to repay past-due amounts, millions find themselves buried in a sea of debt. This is often through no fault of their own, such as when massive medical debt builds up. Chapter 7 or Chapter 13 bankruptcy may be their best option. Filing can bring prompt relief, such as:

  • An automatic stay forbidding bill collectors and creditors from contacting you
  • Allowing you to keep some or all of your property
  • Stopping evictions
  • Stopping utilities from being disconnected
  • Stopping wage garnishment
  • Repaying some debts for pennies on the dollar

Getting a fresh start

Working with an experienced bankruptcy attorney can provide some much-needed relief for anyone experiencing overwhelming debt. Bankruptcy is a complicated process, and you need a knowledgeable attorney to ensure that your paperwork is filed correctly. Most clients who need help, but have been afraid to take action, will find their credit improves within a few months.