For people upset about unfair or deceptive debt collectors, Oklahoma State Senator Gary Stanislawski believes he has a solution. Stanislawski recently introduced a bill that would clamp down on collectors, forcing the companies to do more to prove that they have the right to collect the amounts they claim.
The bill would also ban the collection of “zombie debt,” which is so old that the statute of limitations has run out, according to a related press release.
But the bill also includes language to limit lawsuits by consumers against collections companies by forcing consumers who file lawsuits that are later found to be frivolous to pay debt collectors’ legal fees. The provision worries some credit experts.
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“That could close the door on lawsuits by consumers with legitimate grievances who don’t dare risk suing a debt collector—even if they’ve broken the law—for fear of running up more debt if they are outgunned,” says Gerri Detweiler, Credit.com’s consumer debt expert.
As proposed, Stanislawski’s bill would require debt collectors in Oklahoma to be licensed and supervised by the state. Collectors would face new documentation requirements, including providing proof to courts and consumers that they actually own the debt, and proof that they informed consumers about collection lawsuits. Companies that buy and sell consumer debt also would be required to transfer all available information about the consumer.
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Those provisions could help prevent mistakes in the collections process, which sometimes have caused companies to try collecting too much money, or collecting it from the wrong person, Detweiler says. Partly as a result, the number of consumers complaining about debt collectors has risen in recent years. Over 144,000 people complained to the Federal Trade Commission about debt collection practices in 2010, the last year for which data is available, a 20-percent increase over the previous year.
The bill “looks like it will bring better consumer protections to Oklahoma citizens who are struggling to pay their bills,” says Detweiler.
You can read the bill itself by clicking on Stanislawski’s here, and searching for Senate Bill 1430.
Image: quaziefoto, via Flickr.com