Agencies that pursue credit card debt too fervently face FTC action

Many consumers across the country may have learned the hard way that just because a lender stops sending bills due to non-payment, that doesn’t mean their credit card debt has gone away. In most cases, collection agencies have purchased the balance and will pursue it on their own.

But according to a report in the New York Times, the Federal Trade Commission wants what it calls “significant reforms” to the debt collection industry, which is currently regulated by laws which vary widely from state to state. For example, some states have a statute of limitations on debt that is just three years, while for others, that period is 10 years.

Many states allow debt collectors to pursue balances that are outside that window as long as they don’t file or threaten lawsuits, the report said. But because of the nature of these laws, sometimes all things can get murky for both consumers and collectors, which is why the FTC wants reform.

In many states, debt collection companies have also been assailed by consumer advocates because of harassing phone calls or treatment of debtors.