I read with keen interest the Associated Press article “Agency takes aim at debt collection” in the July 29 edition of The Augusta Chronicle. The proposed rules, if approved, would be implemented by the burgeoning Consumer Financial Protection Bureau.
THESE VAST changes would amount to another unwelcome intrusion by supposed well-meaning bureaucrats. According to the AP, if enacted the proposals would result in the biggest changes to the industry since Congress passed the Fair Debt Collections Practice Act nearly 40 years ago.
While some provisions are worthy of consideration such as an appropriate and compassionate 30-day waiting period for collectors to initiate contact with a spouse or child of a debtor who has died, I am quite skeptical and troubled by other aspects of these rules.
It appears only third-party debt collectors would be affected by the regulations, leaving credit card companies and payday lenders exempt. Many of my clients facing mounting credit card debt would be left with no relief short of filing for bankruptcy protection.
Other provisions are puzzling to say the least. If enacted as proposed, consumers could begin to dispute debt over the phone without reducing their complaint to writing. Setting a bad precedent, this proposal is contrary to the admonition I offer my clients to document all communications in writing thereby preserving a paper trail for potential negotiations or litigation with a creditor. The bottom line is more oversight delegated to a remote federal agency.
While the changes may be well-meaning, they focus on the symptoms while failing to address the underlying causes contributing to out-of-control consumer spending. Recent broadcasts and publications confirm that most Americans are saving at an anemic rate.
FOR INSTANCE, a survey conducted by Bankrate.com revealed a shocking 63 percent of Americans are failing to set aside enough in savings to cover a $500 household emergency. Another survey by Suntrust Bank in March found nearly one-third of American households earning $75,000 a year or more live paycheck to paycheck.
Perhaps the answer lies with a better-informed, less-regulated populace. Financial management and planning should begin in, and be an integral part of, the curriculum of all public schools. Those individuals purchasing their first homes likewise would be well-served by courses that provide budgeting tips and financial planning.
For those who choose to take advantage of these courses, some of which are available today, a financial incentive such as a credit toward closing costs could be offered.
Yet more rules and authority vested in a massive federal agency offers the average consumer false hope. As a real-estate closing attorney, I have observed the feeble attempt to create a better-informed consumer by the
CFPB in residential real-estate transactions. I have yet to hear any positive feedback from buyers or sellers in the wake of the CFPB’s Real Estate Settlement Procedures Act’s integrated disclosures rule implemented last October.
THE CFPB’S unintended legacy is a dysfunctional closing process composed of mortgage companies and settlement agents saddled with costly and cumbersome regulations hindering a smooth and efficient home-buying experience. My fear is of yet another blatant overreach by this federal agency at the expense of naïve and trusting debtors, who remain as vulnerable as ever.
(The writer is an Augusta attorney.)