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Introduction:
Debt collection laws were designed to provide a framework for lenders to recover the debt that they have extended to borrowers. However, the debt collection process can be intimidating and even abusive towards borrowers. In recent years, various governments have introduced new debt collection laws to protect consumers from these abusive practices. The following article discusses new debt collection laws that will come into effect in 2022.
What are the new debt collection laws?
1. Limitations on communication:
One of the major issues with debt collection is the frequent and harassing communication from lenders and collection agencies. Under the new law, debt collectors will be limited to seven calls per week to a borrower. Additionally, they will be required to wait six days between calls. Similarly, debt collectors will be barred from contacting borrowers during holidays, weekends, and other non-business hours.
2. Debt validation:
The new law will require debt collectors to provide accurate and clear information regarding the debt. Specifically, the collectors must provide written statements detailing the amount and nature of the debt, as well as the borrower’s options for disputing the debt.
3. Restrictions on Legal Action:
Debt collectors will also be restricted from taking legal action against borrowers who have not responded to their communications. Similarly, they will not be able to sue consumers beyond the statute of limitations. Moreover, the collectors will be prohibited from threatening legal action that they cannot or will not take.
4. Assignment notifications:
When a borrower’s debt is sold or transferred to a different collection agency, the new law will require that the borrower be notified of such a transfer. The notification must include the new collector’s name, address, and contact information.
5. Privacy:
Debt collectors will be barred from sharing borrowers’ private information with third parties. Additionally, they will not be allowed to disclose their debt collection efforts to anyone other than the borrower, their attorney, or the consumer reporting agency.
FAQs:
Q: What if a debt collector violates the new law?
A: The new law will provide borrowers with the right to sue debt collectors for violations of the new debt collection laws. The lawsuits can result in damages that range from $1000 to $5000.
Q: Will the new law apply to all debt collectors?
A: The new law will apply to any individual or company that is engaged in the business of collecting debts.
Q: How will the new debt collection laws benefit consumers?
A: The new debt collection laws will make debt collection more transparent and fair for consumers. The limitation on communication will protect borrowers from harassment. The validation of debt will ensure that borrowers are aware of the nature and validity of their debt. The restrictions on legal action will prevent unjustified legal action against consumers. The assignment notifications will ensure that consumers are aware of who they owe the debt to. Finally, the privacy restrictions will prevent debt collectors from sharing private information with third parties.
Conclusion:
The new debt collection laws represent a significant change in the debt collection process. These laws will protect consumers from harassment, provide accurate information regarding the debt, and prevent unjustified legal action against them. The privacy restrictions will ensure that borrowers’ personal information is not shared with third parties. Therefore, these laws are expected to provide significant benefits to consumers.
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Article Summary:
New debt collection laws designed to protect borrowers from abusive practices are coming into effect in 2022. Debt collectors will be limited to seven calls per week to a borrower, restricted from taking legal action against borrowers who have not responded to their communications, and prohibited from sharing borrowers’ private information with third parties. Borrowers will have the right to sue debt collectors for violating the new laws, with lawsuits resulting in damages ranging from $1,000 to $5,000. The new laws aim to make debt collection more transparent and fair while protecting consumers from harassment.
