More Debt Collector Rights?

Discussion in 'Credit Talk' started by Carreonand, May 12, 2000.

  1. Carreonand

    Carreonand Guest

    Look at this Chairmans proposal! It is so out there that it may just blow the entire bill!

    To view the entire article, go to

    Hatch Seeks Fewer Curbs On Debt Collectors

    Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah) has proposed
    amending bankruptcy legislation to allow debt collectors to use techniques
    that include telephone calls in the middle of the night, bogus threats of
    prosecution and hundreds of dollars in fees when consumers fail to make good
    on bounced checks within 30 days.<P>
    The amendment would exempt debt collectors from the Fair Debt Collection
    Practices Act when they are trying to collect on bounced checks that have
    been outstanding for 30 days or more after a bank has notified a consumer
    that there were insufficient funds in his or her account. The exemption
    would permit collectors to use techniques that are now outlawed when they
    push to collect tardy payments on credit-card balances or mortgages.<P>
    Aides to Hatch say the amendment would make it clear that checks are not
    forms of credit, as is a credit card, and therefore should be covered by the
    debt-collection law only for a short period. Most courts have ruled that
    bounced checks qualify as debt under the act, a position supported by the
    Federal Trade Commission, which enforces the collection law.<P>
    Many Democrats and Republicans oppose the Hatch amendment, which has not
    been publicly debated. Some lawmakers fear that Hatch's amendment could kill
    the bill outright by wrecking a delicate, hard-won compromise that the House
    and Senate have crafted in the past few weeks on consumer-protection
    provisions. One such provision would require that retailers and other
    creditors make it clear to consumers how quickly interest on debt
    accumulates over time. <P>
    But the two sides remain at odds on several key issues. These include how
    valuable a home a bankruptcy filer should be allowed to keep and how courts
    should calculate whether a consumer can afford to repay some debt.<P>
    Controversy over the Hatch amendment could further hinder progress on the
    bill. Opponents, such as Sen. Paul S. Sarbanes (D-Md.), argue that the
    exemption would be unfair to consumers. In a recent letter denouncing the
    Hatch amendment, Sarbanes noted that it would permit "unfettered collection
    activities" as well as legal action not only against criminals who forge
    checks "but also against the consumer whose checks have been forged."<P>
    The debt-collection law "protects consumers from invasion of privacy,
    harassment, false or deceptive representations, unfair or abusive collection
    methods and illegal fees," Sarbanes wrote in the letter to Sen. Patrick J.
    Leahy of Vermont, the ranking Democrat on the Senate Judiciary Committee,
    which oversees bankruptcy legislation.<P>
    "It does not prevent the collection of a valid debt," Sarbanes wrote. Leahy,
    on Sarbanes' behalf, has in turn objected to Hatch's amendment, warning it
    could torpedo the bill.<P>
    Aides to Hatch say that 30-day-old bounced checks need to be exempted from
    the debt-collection law because many consumers unfairly hide behind the act
    to delay or refuse paying money owed.<P>
    Margot Saunders, managing attorney at the National Consumer Law Center, a
    nonprofit law firm that represents low-income people on consumer issues,
    said few people abuse the law and that even with the 30-day grace period
    there is ample room for abuse by creditors.<P>
    She cited cases in Utah where people have written checks for less than $25
    and have been threatened with criminal or civil prosecution unless they paid
    several hundred dollars in fees to the debt collectors, a practice she said
    federal courts have found to be excessive and illegal.<P>
    Saunders said there are many times when consumers bounce checks for reasons
    beyond their control, such as having relied on a deposit that bounced or
    having been robbed by a fraudulent check writer. And there are other cases
    where debt collectors go after the owner of the account even though a check
    forger, not the owner, wrote the check that bounced, she said. In such
    instances, she said, the debt-collection law is used to block such
    The Senate passed its bankruptcy bill in February, and the House passed
    similar legislation last year. Both bills would generally make it harder for
    consumers to wipe out debt through bankruptcy. But complicated parliamentary
    rules have so far enabled opponents of the bill to block the House and
    Senate from convening a conference to reconcile differences between the two
    In the meantime, lawmakers have been working behind the scenes to craft a
    compromise that both chambers could approve and send to the president once
    parliamentary roadblocks are removed.<P>
    Senate Majority Leader Trent Lott (R-Miss.), House Speaker J. Dennis Hastert
    (R-Ill.) and other Republican leaders yesterday afternoon asked their staffs
    to reconcile the two bills by early next week. If an agreement can be
    reached on the issues, then the leaders will work to remove the
    parliamentary holdups on the legislation.<P>
    Retailers and credit-card companies are pushing for the legislation to plug
    what they see as loopholes in current law that permit consumers who could
    pay off some of their debt to get off the hook completely when they run into
    Consumer groups, several Democrats and the White House have argued that the
    bills are overly harsh to consumers. They argue the legislation should
    contain stronger consumer protections to counter the credit industry's
    aggressive marketing techniques, which bill opponents say bear a large
    responsibility for getting Americans in over their heads in debt.<P>
  2. Melissa

    Melissa Well-Known Member

    RE: More Debt Collector Rights

    Scary!! I wonder how this would affect the CRA's, though. (Such as Chexsystems!) If it's not "credit", then would it be legal to have it listed on a credit report? Or would bad check writers end up in court more often?

    (I'd have gladly gone to court and on probation rather than be blacklisted for five years!)

    Just a question.


    P.S. The lobbyist bribing Hatchett must have bounced the check, huh? :)
  3. Doris K.

    Doris K. Well-Known Member

    RE: More Debt Collector Rights

    I've never understood bounced checks going to collection agencies anyway. I'm not sure how it works in other states, but here in Texas, writing a hot check is a criminal offense and they'll haul your ass off to jail for it.

    When a merchant receives a returned check, he/she attempts to notify the person and gives him/her a certain number of days to make good on it. If that fails, the merchant turns it over to the District Attorney's office who makes a second attempt to collect. When that doesn't work, the DA files charges for theft, and arrest warrants are issued.

    I live just outside Houston, and I've seen on the evening news some of the round-ups the sheriff's department does on occasion. They bust people on their jobs and other really embarrassing places. I'm not sure how well it works, but I'll be damned if I'll ever write a rubber check!

    When I worked for a local affiliate of Trans Union, part of my job was to collect on bad checks. The hotties came directly to us from the bank, bypassing the member merchant. I gave them from 5 to 10 days to cough up restitution and some ungodly collection fees. When that didn't come through, I had to send it directly to the DA's office. It gets UGLY!
  4. Jim

    Jim Well-Known Member

    RE: More Debt Collector Rights

    Our county has a program where the District Attorney uses an outside collection agency to send several scary dunn letters. If still no pay, the DA files charges and mandates a financial management progam as part of the sentence.

    Some merchants just go straight to small claims court, because here in California, they can sue for up to three times the face amount plus fees. It gets expensive very fast to kite checks!!!

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