Thursday, July 26, 2018

Debt Collection Tops the Complaint List

Debt collection is a top complaint category for Hoosiers at both the Federal Trade Commission and the Consumer Financial Protection Bureau.

An estimated one in three Hoosier borrowers has a debt in collections. The results of having a debt in collections can be devastating: it can damage a consumer’s credit, involve the courts, and result in wage garnishment or the seizure of property.

Given the high stakes and the frequency with which Hoosiers complain to both the Consumer Financial Protection Bureau and the Federal Trade Commission about debt collection, we felt it was important to take a close look at this process and make recommendations for improving the accuracy, transparency, and fairness of debt collection in Indiana.

The Institute’s new policy brief highlights the following:

  • Consumer debt has reached an all-time high in the U.S. at $13.21 trillion. Hoosier debt per capita is also at an all-time high, with student loans accounting for an increasing share of that debt. 
  • About one in three Hoosier borrowers has a debt in collection
  • Hoosiers complain most frequently about attempts to collect debts not owed, suggesting notice and documentation requirements should be strengthened, particularly before the courts enter a default judgment or wages are garnished.
  • Hoosiers also complain frequently about communication tactics. Indiana should explore extending the protections under the Federal Fair Debt Collection Act to original creditors, a protection other states have made available to consumers.
  • An estimated one in ten Hoosier employees is having his or her wages garnished. Indiana’s protections for individuals experiencing wage garnishment and levy are among the weakest in the country.  

The brief is available on the Institute’s website. Our policy briefs and research reports help to inform our yearly legislative policy agenda.

Have a debt collection story to share? Contact us!
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