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Delaware is only #2!

In a ranking of the 50 states plus Washington, D.C., Delaware has the second highest number of consumer financial complaints per capita registered with the Consumer Financial Protection Bureau. Delaware is second only to Washington, D.C. in this regrettable ranking.

The biggest complaint among consumers has to do with debt collection. For 26 months in a row, complaints about debt collectors top the list. In the last month reported, debt collection complaints comprised nearly one-third of all complaints to the CFPB. Among military service members, debt collection complaints accounts for nearly half of all complaints. And the biggest debt collection complaint is that the debt is not even owed. It can be that the debt was paid, it was the result of identity theft or belongs to someone else, or even that it was already discharged in bankruptcy.   In many cases, consumers claim that the amount of the underlying debt is inaccurate or unfair, according to the CFPB. Sometimes the debt is so old that it cannot even be legally enforced anymore.

How can this be? Often the debt collectors are large corporations that buy up overdue accounts from other companies who have already written off the debt. These corporations have bought the debt for pennies on the dollar and now will try to collect the entire debt from the consumers. In a recent case, the CFPB fined one of the largest debt-buying company in the country $8 million for aggressively pursuing consumers with misleading statements about debts that were potentially inaccurate, lacking documentation or unenforceable. In another case, the CFPB took action against a large debt collection company for running a “phantom debt” collection scheme. “Phantom debt” is debt that consumers do not actually owe or that is not owed to those who are attempting to collect it. Yet there are companies out there that will use harassment and deception to try to collect this “phantom debt.”

If you get a call asking you to pay on an overdue debt, you may not even recognize the name of the company because it’s not someone you have dealt with in the past. The debt may have been legitimately sold to a reputable collector, or it may be “phantom debt.” So how do you know whether you really owe what they claim?

The Fair Debt Collection Practices Act gives consumers certain rights when dealing with debt collectors, including the right to have the debt verified. Here’s what you need to know. You have 30 days from the   time the debt collector first contacts you to request verification of the debt. You must make your request in writing. You should notify the debt collector that (1) you dispute the debt or some portion of the debt and (2) you want to know the name and address of the original creditor. Once you make this request in writing, the law requires the debt collector to cease all collection activity until it provides you with the information requested, including verification of the debt or a copy of a judgment against you.

The CFPB was established by Congress 5 years ago in the Dodd-Frank Act, which was enacted as a response to the financial crisis and Wall Street bailouts of 2008. The CFPB is the government agency charged with empowering consumers to take more control over their financial lives through promoting transparency and enforcing financial regulations and rules for financial institutions.

If you have asked for verification from a debt collector and the debt collector has continued to collect on the debt without providing verification, or if they have provided you with wrong verification information, call Mary Higgins, Esq. at 302-894-HELP (4357).   We may be able to help you resolve the matter, or seek an award for you from the Courts.   Each situation is different, and this article is not individual legal advice. You must consult with an attorney for your own situation.

Posted on January 26, 2016