Debt Collection Efforts On The Rise
September 22, 2008
There is a sudden, renewed sense of urgency in the debt collection efforts of banks and credit card companies.
In this time of increased foreclosures, rising unemployment and a rocky economy, more consumers are defaulting on their credit card payments. According to the Wall Street Journal, the percentage of bank credit-card accounts that are delinquent rose to 4.51% in the first quarter and they expect the problems to get worse.
Credit card companies and banks are responding by stepping up their debt collection efforts. They are pursuing past due accounts more aggressively and starting collection practices earlier rather than waiting for accounts to go more seriously past due.
It is not uncommon to get a phone call from a debt collector when you’re just a few days behind on payments, as opposed to a few weeks as was previously the case.
Creditors are also turning delinquent accounts over to third party, collection agencies sooner. The debt collection agencies may not be as easy to deal with as the original creditor. These agencies are also subject to the Fair Debt Collection Practices Act.
So what are people doing? They’re ignoring those phone calls in droves.
InsideARM.com reports that Gwenn Bezard, research director for Aite Group, is noting that creditor and collector efforts are falling short of the mark.
Some financial institutions are becoming more creative in their attempt to reach borrowers. They might offer a free phone card or gift card that can only be activated when they call the company. Call to redeem your card and you’re faced with a barrage of payment plans, waived fees, lower payments and flexible interest rates. Citigroup is even offering settlement programs to those who are extremely behind on their payments.
Illegal? Deceptive? I think so, but it depends on the way you’re approached. If you get a letter from a debt collector promising you a free gift and not clearly disclosing that the letter is an attempt to collect a debt, it may be in violation of federal law.
Consumers may find that credit card companies and banks will be more willing to help if they communicate sooner and work with lenders to make payments.
You may also find yourself the target of repeated attempts to scare you or trick you into payment. As always, if you think you’re being misled it’s best to call on an experienced consumer protection lawyer to review your situation.
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