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Consumer Financial Protection Bureau Proposes New Rules to Combat Improper Debt Collection

Recent reporting by The Hill reveals that the Consumer Financial Protection Bureau (CFPB) has proposed new changes to the ways that debt collectors may contact consumers. The proposed rule changes also limit litigation that Debt Collectors may initiate as well as what information they may refer to Credit Reporting Agencies.  Debt collectors have long harassed and abused consumers.  These days, with the COVID-19 virus, they have the ability to run rampant. The report goes on to detail how CFPB Director Kathy Kraninger hopes to clarify communications rules for the digital age. The proposed rules are currently in the 90 day comment period and will take effect next year. With the advent of social media, debt collection rules need to be updated to keep up with new forms of communication. The proposed rules include rules around email, cell phone, text message, and social medial contact by debt collectors. The rules also restrict the ability of debt collectors to contact consumers through a work email. Consumers will even be able to unsubscribe from some forms of communication from debt collectors. The report also notes that in addition to limits on the frequency of contact a debt collector can make, debt collectors will also be barred from threatening legal action for Zombie debt. That is debt that is past the statute of limitations for a lawsuit. Many debt collectors use various tactics to try to revive this debt and trick consumers into reopening the statute of limitations. These rule changes will make that much harder to do. The full and exact text of the rule changes is unclear as of The Hill’s...

Can Zombie Debt be killed once and for all in Arizona?

Many Americans struggle to pay their bills and are forced to endure debt collector harassment on legitimate debt that by law are considered legitimate.  However, what can be even worse, is that some creditors seek to enforce “Zombie Debt”, a term describing old debt that some creditors have refused to let die. CBS Austin reports on new protections Texans can count on in the fight against Zombie Debt and creditor harassment. Every State has a statute of limitations for debt collection. This means after a set number of years have passed a debt may be considered uneforceable. The legal loophole has been that if you make a payment on an old debt that is past the statute of limitations, that debt can rise from the grave allowing creditors to reopen collection efforts on unsuspecting debtors. Your payment restarts the statute of limitations. It was reported that debt collectors have been tricking people into creating Zombie Debt. Knowing that a single payment would restart the statute of limitations, creditors have used a variety of tactics to entice unsuspecting debtors into making payments. Some creditors entice unsuspecting consumers with promises of positive credit reportings on the payment on old debt.  As soon as the consumer make a payment, an otherwise dead debt, comes back to life…hence the term “Zombie Debt.” The report also notes the lengths that debt collectors will go to in order to convince people to make just one payment, some of which have been deemed illegal. The report notes instances of people being threatened with jail time for failing to pay a debt. Other harassing debt collection practices...
Why Arizona Consumers Should Avoid Cash Advances on Credit Cards

Why Arizona Consumers Should Avoid Cash Advances on Credit Cards

Cash advances on credit cards don’t work like normal purchases. These transactions come with different rules and interest rates, and they get expensive quickly. Relying on credit card cash advances to cover expenses is a bad habit. It can easily lead to heavy fees, very high balances, and lower credit scores. Why Credit Card Cash Advances Cost Arizonians too Much Money Unless you read the fine print on your user agreements, you may think that using your credit card to get cash is the same as swiping it to buy shoes. Chances are, it isn’t. Most credit card issuers charge higher interest rates for cash advances. Also, these interest rates kick in immediately, with no grace period granted. On average, interest rates on credit card cash advances are around 23.68%, even for cardholders with good credit. Also, borrowing cash on your credit card normally comes with a fee. Most Minnesotans are charged $10 or five percent of the cash amount borrowed. Unfortunately, borrowers pay the more expensive of the two. For example, if you only need $40, you’ll pay the $10 fee. However, you if need a $600 cash advance, you’ll owe the issuer $630. When you add possible ATM fees into the equation, credit card cash advances don’t make much sense financially. This is especially true for Minnesota consumers who routinely use them. Depending on your needs, you may consider taking out a small personal loan or borrowing money from a family member as better options. Ideally, though, you should limit your spending and fit your expenses to your income. Treating your savings as a necessary expense is...
Arizona Consumers who are Worried about Credit Card Debt should ask themselves these 6 Questions

Arizona Consumers who are Worried about Credit Card Debt should ask themselves these 6 Questions

For Arizona residents who suspect that they might be in over their heads with credit card debt, there are some sure signs for which to look. The fact that you’re concerned, however, is a good sign. It means that you aren’t living in denial of a potential problem. Yet, before panicking, ask yourself these six questions. You can then determine whether or not your credit card debt is out of control. Early recognition of the problem may prevent financial trouble and credit score damage. Six Questions to Help Arizonians Identify a Credit Card Debt Crisis Any Arizona consumer who has ever experienced problems with credit card debt can tell you that problems can sneak up on you. It may seem that everything is going fine. But if your spending increases and your payments don’t, debt starts to accumulate. For Arizonians who have a nagging suspicion that they are not managing their credit cards as well as they should, here are the six important questions to ask. Your honest answers may help you salvage your credit score before it’s too late. If your credit score has dropped, now is the time to check your credit reports. Are your balances just going up and up every month? Ideally, you should be paying your credit card balances off every month. This is the only way to avoid interest charges and debt accumulation. If you’re not paying your monthly credit card bills in full, you should at least whittle down the balances. Growing balances, on the other hand, are a sign of overspending. Are any of your credit cards maxed out? Arizona consumers...
How Arizona Consumers can stop the Debt Cycle and Start Using Credit Responsibly

How Arizona Consumers can stop the Debt Cycle and Start Using Credit Responsibly

Arizona consumers with unmanageable debt loads should work to bring their balances down. That doesn’t mean they should stop using credit altogether. Responsible credit use is the only way to build and maintain good credit, but you don’t want to spend the rest of your life shackled to debt and paying out the nose on interest charges. Unfortunately, a lot of Arizonians who’ve built hefty amounts of debt have just resigned themselves to their current situations. They don’t see an end to the debt cycle, so they just accept the fact that they’ll be in debt for the rest of their lives. However, it doesn’t have to be this way. With careful budgeting and a willingness to restrain excessive spending, heavily indebted Arizona consumers can pay down high credit card balances, save money on interest charges, and start using credit as a tool to build a better credit score. How Most Arizona Consumers Start the Debt Cycle with Credit Card Abuse In 2017 the Northwestern Mutual Planning and Progress Study revealed that the average American carries about $37,000 in debt. This includes mortgages, student loans, personal loans, auto loans, and credit card debt. According to the same study, about half of those who are indebted in the U.S. regularly devote about half of their income to debt repayment. Of course, there’s little that you can do about having a house or car payment. You need a place to live, and most Arizona residents need access to a vehicle. At best, you may be able to refinance your current mortgage or loan in order to get a better interest rate....