Research of the Week: Do You Really Owe that Debt?
Latest CFPB complaint snapshot shows collection companies often get it wrong.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
The Consumer Financial Protection Bureau (CFPB) released a new monthly snapshot of debt collection complaints received by the bureau as of March 1, 2016. Basically, the CFPB provides a regular report that shows how many complaints were received and what they were about.
The big result
The CFPB report shows that of the 834,400 complaints received as of March 1 of this year, 219,200 of those complaints were about debt collection companies. So about one in four complaints handled by the CFPB has to do with someone complaining about a debt collector that’s harassing them.
The majority of that harassment?
The CFPB report shows that 38% of the complaints received about debt collection companies had to do with the consumer not actually owing the debt. Whether it was originally their debt and had been repaid, or it was never theirs in the first place, consumers seem to be increasingly harangued by collectors attempting to collect a debt that isn’t actually owed by that consumer.
The fascinating details
Other top complaints included repeated phone calls multiple times in the same week or even on the same day, as well as the debt collector not providing enough information for the consumer to even verify if the debt is one they owe or not.
The worst offenders according to the CFPB report were Encore Capital Group and Portfolio Recovery Associates, Inc. They each receive over 100 complaints every month. These are among the largest debt buyers in the country, so they work with large volumes of charged-off debts. As a result, it’s not all that surprising that they end up receiving the most complaints, since they hold so many collectible debts. However, it should also be noted the CFPB took enforcement actions against both companies due to deceptive tactics.
What you can do
Anytime you have a collector call, whether you owe the debt or not, make sure they can verify that the debt is yours and that you owe the amount they say. If that can’t provide that verification, then you can’t be held accountable. It’s that simple.
And verifying the debt is critical, because in many of the complaints received by the CFPB they had the completely wrong person pegged for the debt. So you can wind up paying off someone else’s collection account if you’re not diligent about ensuring the debt is one you actually owe.
The collector should be able to tell you when the debt was incurred, the total amount owed and who the original creditor or company who you owed was. If they can’t provide all of that information readily, proceed with caution and ask for verification before you make any commitment to repay. This helpful Ask the Expert Video explains what steps you can take to ensure a debt is really yours.
And also keep in mind that any payment made on a time-barred debt in collections resets the clock on the amount of time the collection agency has to collect. “Time-barred” refers to the statute of limitations that exists on most debt collections. At most collectors usually have fifteen years to collect a debt. However, if the consumer makes a payment, the clock resets.
If you have old debts that were charged-off by the original creditor and are currently giving you trouble in collections, we may be able to help. A certified credit counselor can advise you of your options and, if it’s the right choice in your situation, collection accounts may be able to be included in your debt management program if you decide to enroll. To learn more call Consolidated Credit today at to speak with certified credit counselor or complete an online application to tell us more about your situation.