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Fair Debt Collection: 1.3.2 Consumer Attorneys

The “Find an Attorney” feature on the National Association of Consumer Advocates’ website206 lists hundreds of lawyers with “debt collection” as one of their practice areas. The “debt collection” practice area includes both attorneys who specialize in defending consumers who have been sued in a collection action and those who sue debt collectors for violations of the Fair Debt Collection Practices Act and other state and federal consumer protection statutes.

Fair Debt Collection: 1.3.3 Original Creditors

Original creditors are entities that provide extensions of credit such as banks, credit unions, student loan lenders, auto lenders, and payday lenders. Additionally, some original creditors provide goods or services on credit, such as utility companies, medical providers, and cell phone companies.

Original creditors frequently employ people in-house to collect on their delinquent accounts. In a survey of credit card issuers conducted by the CFPB, all respondents conducted at least some collection activity in-house.207

Fair Debt Collection: 1.3.4.1 Generally

Debt buyers are companies that purchase debts from original creditors, intermediaries, or other debt buyers. Debts are purchased for pennies on the dollar. The debt buyer may either try to collect the debts themselves, place them for collection with debt collectors, or sell the debts to other debt buyers.

In 2019, the CFPB estimated that there were 330 debt buyers in the United States, noting that many debt buyers also collect consumer debts owed to other owners.211

Fair Debt Collection: 1.3.4.3 Average Price of Debt

Debt buyers purchase debt for pennies on the dollar, but the exact amount depends on a variety of factors such as the type of debt, the age of the debt, the number of times that it was previously placed for collection, and the amount of debt for sale in the market at that time.

Fair Debt Collection: 1.3.4.4 Age of Purchased Debt

The most comprehensive data available about the age of debts being collected by debt buyers comes from a 2013 FTC study of the debt-buying practices of some of the nation’s largest debt buyers.240 This study found that nearly twenty-five percent of debt acquired from the original creditor, and more than sixty percent of debt purchased from other debt buyers, was over three years old at the time of purchase.241 More than thirty percent of the debt purchased from other debt buyers was over six yea

Fair Debt Collection: 1.3.4.5 Identifying Some of the Largest Debt Buyers

Using data from the Nilson Report, the FTC compiled a chart of the ten largest companies purchasing credit card debt from credit card issuers from 2005 to 2011.246 In 2011, Sherman Financial Group, L.L.C. (subsidiaries include LVNV Funding, L.L.C. and Resurgent Capital Services, L.P.) ranked first, Encore Capital Group, Inc. (subsidiaries include Midland Funding, L.L.C.

Fair Debt Collection: 1.3.5.1 First-Party Collection

Some creditors, like credit card issuers, hire “first-party” collectors, which the CFPB defines as “outside collectors who work under the name and direction of the creditor when collecting on delinquent debt.”253 One collection industry analyst reports that, “[t]he primary difference between first- and third-party collections is the stage at which the service occurs; first-party work occurs earlier in the receivable’s life cycle, typically when a delinquent account is under 90 days past due and has not yet been charg

Fair Debt Collection: 1.3.5.2.1 Introduction

Third-party debt collection agencies are hired to collect accounts that are owned by original creditors or debt buyers. They are “third-party” collectors because they collect in their own name for debts that are owned by other entities.

Fair Debt Collection: 1.5.1 Collection Management System

Many collectors use sophisticated software to “maintain [ ] account-level information about debts in collection, make [ ] the information available to individual collectors, and track [ ] account activity such as calls made, the outcome of discussions with consumers, and payments made.”508 In a 2021 TransUnion survey of debt collection agencies, 79% reported using collection management software and 34% reported using compliance software.

Fair Debt Collection: 1.5.2 Websites and Portals

Many collectors maintain their own websites, which may need to be copied or downloaded (using software created for that purpose) in order to preserve the information for evidentiary purposes, since web pages change frequently at some sites. Older versions of a web page are often available on www.archive.org.

Fair Debt Collection: 1.5.5 Collection Analytics

Debt buyers and debt collectors regularly gather data about consumers and also about their own internal collection practices. Increasingly, they use analytics software to evaluate this data and make decisions based on their evaluation.

Repossessions: § 3914. Extension of protections to citizens serving with allied forces

A citizen of the United States who is serving with the forces of a nation with which the United States is allied in the prosecution of a war or military action is entitled to the relief and protections provided under this chapter if that service with the allied force is similar to military service as defined in this chapter. The relief and protections provided to such citizen shall terminate on the date of discharge or release from such service.

Repossessions: § 3916. Information for members of the Armed Forces and their dependents on rights and protections of the Servicemembers Civil Relief Act

(a) Outreach to members

The Secretary concerned shall provide to each member of the Armed Forces under the jurisdiction of the Secretary pertinent information on the rights and protections available to members and their dependents under the Servicemembers Civil Relief Act.

(b) Time of provision

The information required to be provided under subsection (a) to a member shall be provided at the following times:

Repossessions: § 3917. Extension of rights and protections to reserves ordered to report for military service and to persons ordered to report for induction

(a) Reserves ordered to report for military service

A member of a reserve component who is ordered to report for military service is entitled to the rights and protections of this subchapter and subchapters II and III [of this chapter] during the period beginning on the date of the member’s receipt of the order and ending on the date on which the member reports for military service (or, if the order is revoked before the member so reports, or the date on which the order is revoked).

Repossessions: § 3919. Exercise of rights under chapter not to affect certain future financial transactions

Application by a servicemember for, or receipt by a servicemember of, a stay, postponement, or suspension pursuant to this chapter in the payment of a tax, fine, penalty, insurance premium, or other civil obligation or liability of that servicemember shall not itself (without regard to other considerations) provide the basis for any of the following:

(1) A determination by a lender or other person that the servicemember is unable to pay the civil obligation or liability in accordance with its terms.

Repossessions: § 3933. Fines and penalties under contracts

(a) Prohibition of penalties

When an action for compliance with the terms of a contract is stayed pursuant to this chapter, a penalty shall not accrue for failure to comply with the terms of the contract during the period of the stay.

(b) Reduction or waiver of fines or penalties

Repossessions: § 1692f. Unfair practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

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(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if—