Increased Consumer Debt Means More FDCPA Lawsuits
America is a very litigious society.
We do love our lawsuits.
And with credit cards debt skyrocketing over the past few years it's no surprise that FDCPA lawsuits would soon follow in those footsteps.
With credit repair and debt settlement companies playing a greater role in advising consumers about their rights, debt collection agencies are being held to the letter of the law.
The FDCPA, or Fair Debt Collection Practices Act, was passed by Congress in response to abusive practices by collection agencies.
Stricter bankruptcy laws have forced a large number of Americans to deal with these collection agencies.
Predictably, the lawsuits set a record high in 2009.
Charge-Offs Increase In January of 2010, the credit card charge off rate, as measured by Moody's Credit Card Index, reached an all-time high in their 20-years of documenting this statistic at just above 11%.
That's nearly a 49% increase in the number of accounts that credit card lenders had to write off as a loss from the same time period just a year ago.
2009 was a record year for credit card defaults, and the increase has so far carried over into 2010.
The increase in charge-offs means more accounts end up in the hands of debt collectors.
While these collection agencies are generally given a lot of leeway when it comes to collecting debts, the law does set limits on their conduct.
FDCPA Complaints Follow Suit It was unavoidable that the number of FDCPA would follow in line with the significant increase in credit card defaults.
It's simple math really, more debt means more collection efforts.
Increased collection efforts means more complaints to the Federal Trade Commission citing that the FDCPA was not adhered to and consumer's legal rights were violated.
In 2008, there were 5,188 FDCPA lawsuits filed.
In 2009 this statistic rose almost 60% to 8,287 filings.
With charge off's still trending upwards we can only assume that 2010 will be another record breaking year for this type of legal action.
When Will this Trend Stop? It's normal for debtors who have fallen behind in paying their bills to have trouble with collection agencies.
As a result they enlist the help of a credit repair or debt relief organization.
Having a firm grip on the laws, these companies are informing their clients what is, and more importantly what isn't allowed by law.
Until we see a drop in the charge off rates, which is so heavily tied to our reeling economy, this upward movement is bound to continue.
While debt collectors have the right to that money, the FDCPA will ensure that they do so ethically and legally.
We do love our lawsuits.
And with credit cards debt skyrocketing over the past few years it's no surprise that FDCPA lawsuits would soon follow in those footsteps.
With credit repair and debt settlement companies playing a greater role in advising consumers about their rights, debt collection agencies are being held to the letter of the law.
The FDCPA, or Fair Debt Collection Practices Act, was passed by Congress in response to abusive practices by collection agencies.
Stricter bankruptcy laws have forced a large number of Americans to deal with these collection agencies.
Predictably, the lawsuits set a record high in 2009.
Charge-Offs Increase In January of 2010, the credit card charge off rate, as measured by Moody's Credit Card Index, reached an all-time high in their 20-years of documenting this statistic at just above 11%.
That's nearly a 49% increase in the number of accounts that credit card lenders had to write off as a loss from the same time period just a year ago.
2009 was a record year for credit card defaults, and the increase has so far carried over into 2010.
The increase in charge-offs means more accounts end up in the hands of debt collectors.
While these collection agencies are generally given a lot of leeway when it comes to collecting debts, the law does set limits on their conduct.
FDCPA Complaints Follow Suit It was unavoidable that the number of FDCPA would follow in line with the significant increase in credit card defaults.
It's simple math really, more debt means more collection efforts.
Increased collection efforts means more complaints to the Federal Trade Commission citing that the FDCPA was not adhered to and consumer's legal rights were violated.
In 2008, there were 5,188 FDCPA lawsuits filed.
In 2009 this statistic rose almost 60% to 8,287 filings.
With charge off's still trending upwards we can only assume that 2010 will be another record breaking year for this type of legal action.
When Will this Trend Stop? It's normal for debtors who have fallen behind in paying their bills to have trouble with collection agencies.
As a result they enlist the help of a credit repair or debt relief organization.
Having a firm grip on the laws, these companies are informing their clients what is, and more importantly what isn't allowed by law.
Until we see a drop in the charge off rates, which is so heavily tied to our reeling economy, this upward movement is bound to continue.
While debt collectors have the right to that money, the FDCPA will ensure that they do so ethically and legally.
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