Should Congress overhaul the debt collection system?
The Comprehensive Debt Collection Improvement Act is an omnibus bill (a proposed law that covers a number of topics) encompassing eight reforms for the debt collection system: (1) Prohibits “confession of judgment” agreements on loans to small business owners. A “confession of judgment” allows the lender to penalize the borrower for not paying without going through the court system. (2) Prohibits debt collectors from threatening a servicemember with prosecution under the Uniform Code of Military Justice. (3) Cancels student loans if the student dies or is permanently disabled. (4) Requires creditors to notify the consumer before reporting medical debt to a government agency (typically for credit ratings). (5) Prohibits debt collectors from contacting a consumer via text or email without the consumers’ consent. (6) Limits federal government use of contracted debt collectors until 90 days after the debt is owed and limits those debt collectors' fees. (7) Increases penalties for debt collectors who fail to comply with the act. (8) Ends “non-judicial foreclosures” where homes can be foreclosed without the inhabitants having an opportunity to contest foreclosure in court. Sponsor: Rep. Maxine Waters (Democrat, California, District 43) View full bill text ➔
How do you feel?
• "[Title Three] is unnecessary and would impose unhelpful bureaucracy into a situation where banks are already doing what the legislation would mandate. Currently, banks are discharging private student loans when the borrower becomes totally and permanently disabled. Adding a federal mandate with various extra steps and requirements will only hinder a well-functioning process and not provide any help to private student loan borrowers." Source: Richard Hunt (President and CEO of the Consumer Bankers Association)
• "Consumer credit can determine a person’s ability to own a home, is used to set auto insurance rates, and is even used to determine employment eligibility, so it is absolutely vital that we ensure consumers, especially residents in communities like the ones I represent who have historically had limited to no access to credit, are able to have as many tools as possible to secure it. For too long, a sudden health crisis or emergency room visit has meant years of being denied housing, transportation, or other necessities because of a medical item on a credit report—this bill will change that." Source: Rep.Rashida Tlaib (Democrat, Michigan, District 13)
• "Our servicemen and servicewomen make extraordinary sacrifices on our behalf. The last thing they need is harassment from manipulative debt collectors who take advantage of their service. This legislation will put a stop to those practices." Source: Rep. Madeleine Dean (Democrat, Pennsylvania, District 4)