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CFPB warns of consumer debt scams from fake bill collectors, P. 3

In the past two entries, this blog has been discussing consumer protections in the debt collection industry. The Consumer Financial Protection Bureau says that fake bill collection scams appear to be on the rise in the United States. Obviously, not all attempts to collect on a debt are fraudulent.

Valid bill collectors are required to send a consumer written notice of the amount due on a debt within five days of a first contact. Many consumers, unfortunately, may be accustomed to such written notices. Some consumers start ignoring the notices and other mail as well.

Creditor harassment is an issue in America. A person facing such harassment may send a written letter to a collector to cease communication. A bill collector may respond to the letter stating that no further action will be taken. The debt collector may also contact a consumer who has sent a letter to advise the debtor of a specific action the bill collector intends to take, such as filing a lawsuit.

Creditors may, at times, seek to obtain a judgment in court on the debt. If a consumer ignores the court documents, the debtor may not know that a creditor lawsuit has been filed. If the creditor obtains a judgment on the debt, the creditor can use that judgment to garnish wages and seize money in a consumer's bank account to apply to the judgment.

Bill collectors cannot threaten to garnish wages without the legal authority to do so. Similarly, debt collectors are prohibited from using harassing or abusive language in seeking to collect on a debt. Certainly, a collector cannot threaten violence.

Many consumers who fall behind on the bills may be able to create a budget, or negotiate with creditors to find debt relief. It should be noted that negotiating a debt may have tax implications, and consumers should seek the advice of a financial professional or legal counsel when negotiating debt.

Consumers may also be able to find a fresh start under the Bankruptcy Code. Filing for bankruptcy generally stops bill collection efforts, at least temporarily. Wage garnishment, repossessions, home mortgage foreclosures and harassing call from debt collectors can be stopped though filing for bankruptcy. For information on bankruptcy protection, Cincinnati area consumers can seek information from a bankruptcy lawyer.

Source: Examiner, "Fake debt collection scams on the rise," William Lewis, Dec. 28, 2012

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