With tens of millions of Americans owing an average of
$1400 to $1500 in debt collection, business for collection agencies and law
firms is booming. Purchasing debt for
four to six cents of each dollar owed can prove to be quite lucrative. However, the Consumer Financial Protection
Bureau has recently implemented several new regulations. These regulations may dampen the enthusiasm
of buying paper debt for some collection agencies. Many of the new regulations apply to mortgage
lenders but some also apply to regular non-mortgage debts. The CFPB has produced extensive information
in this regard that can be downloaded from the internet.
New Collection Tactics
Because of new consumer protection, collection agencies
and law firms are stepping up their “bedside manner” when
it comes to collecting debt. All
investors and companies that purchase debt are more reluctant to purchase debts
because of the new regulations. Some
agencies are not procedurally equipped to be compliant rather than just demand payment. Law firms may be able to deal with such
changes because more effectively since they are skilled at reading and
interpreting the new laws and regulations than straight collection
agencies. Attorneys deal with many
different clients all the time and are therefore more flexible in gauging their
assistance accordingly.
Law Firm Vs. Agency
Any new regulation handed down from the government,
whether state or federal, is bound to include lots of paper work and even more
reading. Attorneys read, among other
things, for a living. Their eyes and
minds are trained to see flaws and benefits in any legal document immediately. Because of their extensive exposure to legal
documents, they are much quicker and much better at adhering to new laws, thus
avoiding hefty fines for non-compliance.
Law firms still will be very effective in collecting debt on behalf of
their client, the creditor.
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