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Why Industry Shouldn’t Start Its Touchdown Dance Too Early

It was very interesting to note from Wednesday’s Debt Collection Town Hall hosted by the Consumer Financial Protection Bureau that consumer advocates really only made passing reference to the financial responsibility that individuals should bear when repaying debts. One consumer lawyer went as far as to suggest that debts that were beyond the statute of limitations should not be collected on, in any form. Then yesterday, a published report from a mainstream media outlet discussing whether individuals should pay off “old collection debts,” included this little chestnut: “paying of your old collection debt isn’t always the best move.”

Lower down, near the bottom of the article is a section with a headline, “When It Could Make Sense to Pay Off an Old Collection Debt”. Are there scenarios where it does not make sense to pay off an old collection debt?

In the last paragraph of the story — the 32nd paragraph for those of you keeping score at home — a consumer attorney concedes that paying off debts is “the morally right thing to do.” How generous.

I go on this little rant because I think it highlights a key point that has been made a number of times since the CFPB released its proposed debt collection rule. Consumer advocates are not in love with the proposed rule and are going to rally their troops to file comments making sure the CFPB knows that they believe the rule is not going to do enough to protect consumers. A presidential election is 18 months away and it is unlikely that the final rule will be enacted by then, meaning if a Democrat takes the White House and opts to replace Kathy Kraninger as director of the CFPB, a new director may want to revisit the provisions of the rule.

It is incredibly important for all stakeholders in the credit and collection industry to make sure their voices are heard as the CFPB considers making any changes to the proposed rule. Just because the proposed rule is workable does not mean that the industry should assume a final rule will look exactly the same. The comments could make or break what is in the final rule. To use a football analogy, the CFPB has driven the ball to the one-yard-line. It’s up to the industry to help make sure the ball gets across the goal line.

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