A new rule by the Consumer Financial Protection Bureau (CFPB) – which was initially created to protect consumers – tilts the playing field in favor of debt collection agencies.
Under the new rule, finalized Nov. 4, bill collectors can contact you not just by phone but also by email, text message or social media. They can also target you more frequently than before.
More U.S. households face overwhelming debt
While the CFPB says consumers can opt out of electronic communications with collection agencies, they did not explain how that will happen. The rule is significant as nearly 17 million households across the U.S. face debilitating debt – almost 14% of all Americans.
Despite the enormous number owing more than they own, fewer than 1% file for bankruptcy each year. In 2019, just over 752,000 filed for Chapter 7 or Chapter 13 bankruptcy taking advantage of the protections offered and helping them regain their financial independence faster.
Bankruptcy offers immediate and long-term benefits
The CFPB rule has broad implications and could affect one out of every four Americans – 70 million – who are targeted by bill collectors at any given time. Many could immediately benefit by talking to an experienced bankruptcy attorney and taking action. Filing provides:
- Immediate relief from aggressive debt collection efforts as they can no longer contact you by any method
- The ability to keep your house, car and other personal possessions
- A faster way to rebuild credit
- Safeguards to protect retirement and additional funds
- A way to pay back at least some of the debts for a fraction of the amount owed
- Peace of mind
Don’t let fear postpone financial recovery
While no one envisions filing for bankruptcy one day, more and more people face financial hardship during the current health care crisis. Overwhelming medical bills remain one of the biggest reasons why families and individuals face an economic dilemma as well.
But too many people fear that filing for bankruptcy will lead to more long-term harm. The truth is, while bankruptcy does remain on your credit report for up to 10 years, people who file usually see positive effects within a few months of their debt being discharged. It’s the “doing nothing” that can lead to more unnecessary economic harm.