All about the new debt collection policy of the US

If you are a resident in Los Angeles or have a business there, or you run a debt collection agency in Los Angeles, this article is vital for you. Recently, a new policy came into effect in the US. The consumer financial protection bureau has come up with a new policy that limits some powers of the collector, by giving them powers in other areas. This step is in accordance with the safety of both the collector and the debtor.

In this blog, we will look at the three main changes the policy has made, and how it will affect the debt collection process in Los Angeles and the whole of the US. Here are three main changes:

1. A debt collection agency like Cedar business services cannot call a debtor more than seven times.
2. After the first call, a debtor has to wait at least for a week for ringing the delinquent again.
3. Lastly, the collector can use messages or social media to contact the debtor anytime. There is no limit on how to use texting services to initiate a conversation with the debtor.

Effects of these rules on both debtors and creditors

Effect of decreasing call numbers

The current situation is such that a debt collector has themselves decreased the numbers of calls they make to a delinquent. The reasons behind this are the fact that debtors often don’t respond to these calls or refuse to communicate. It diminishes the results that they are expecting with the calls, so they limit it. Thus, this new policy has not much or no consequences at all for collection companies.

Effects of the rule that companies can call a debtor only once a week

It depends on the companies. If the debt collection firm uses passive-aggressive methods for debt collection, which are more on the side of harassment, it will affect them negatively. But for reputable firms like Cedar business services, it is not a problem. They already understand that calling a customer so much has no value. They know the value of digital tools for better communication and cost-saving purposes.

Effects on debtors due to digital contact

Since the collector will now focus more on communicating through Facebook or Whatsapp, it can have two types of effects on the debtor. One, some may find it annoying and they can opt-out of it. Others may find it better to get reminders about debt and EMIs via text than continuous phone calls.

Effect on debt collectors due to the shift from phone to digital means

It is efficient to use a phone to call as you get to have direct contact with the debtor. But both debtors and creditors are moving ahead and demand communication outside work hours. So, as a collector, you have to make the shift if you want to keep the clients happy.

Also, a collector is always looking for ways to improve their efficiency. Also, you can add a link to the digital conversation for them to open and chat with collectors for better clarity and debt validation. These new policies don’t affect the debt collectors much. Now, it is in the hands of the debtors who will decide how they respond to this new development.

(Article inspired by the conversation between Richard Blewis and Dora Rapcsaik.)

Jackson Gilbert is a Blogger. With his skills, he has been helping fellow marketers and brands worldwide. When not glued to his laptop, he can be found making travel plans that rarely happen.