Plan limits debt collectors’ phone calls per week

The new rules from the Consumer Financial Protection Bureau would require collectors to have more documentation to prove a debt is owed and initiate a 30-day waiting period for loans tied to someone who has recently died.

Regulators estimate roughly 70 million Americans are contacted by debt collectors each year, and more Americans submit complaints to state and federal agencies about unfair or deceptive practices than any other part of the consumer financial system. These would be the biggest changes to the industry since Congress passed the Fair Debt Collections Practices Act nearly 40 years ago.

“This is about bringing better accuracy and accountability to a market that desperately needs it,” Consumer Financial Protection Bureau Director Richard Cordray said.

The changes would affect only third-party debt collectors. The agency has yet to propose rules that would affect first-party debt collection practices, such as credit card companies and payday lenders.

Third-party collectors typical- ly buy large databases of past-due loans and credit cards for pennies on the dollar, but those files can include loans discharged in bankruptcy or some too old to legally collect. Under the new rules, they would first have to more substantially show a debt is valid before starting collection.

Collectors would also have to provide clearer and easier ways for someone to dispute the debt.

Once a debt is proved valid, a collector would be limited to no more than six communication attempts per week.