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Articles Touting Increase in Collection Lawsuits Leave Out Key Cause

I’ve had a couple people reach out to me in the past few days, sharing a link to an article that was published in The Wall Street Journal pronouncing that “debt collectors are making a comeback” because they are filing more lawsuits and because consumer advocates say collectors are using more “aggressive” tactics, such as collecting on time-barred debt.

That was not the only article in the mainstream media this holiday weekend that examined why collectors are filing more lawsuits against individuals.

What was interesting about what I didn’t read in the article was that many collectors have been pushed to filing lawsuits against individuals because those people refuse to answer the phone when it rings or reply to a collection letter when it is mailed to them. There was no mention of falling right-party contact rates [Editor’s Note: Check out a webinar this Friday about the topic].

Much like individuals who feel they are boxed into a corner and don’t have a way to get out of their financial issues, collectors are forced to file lawsuits when individuals refuse — either because they are embarrassed, because they can not pay the debt, or because they do not want to be bothered — to communicate with collection agencies. Where was the mention of that in either article?

Find me a collection agency executive who prefers to file a lawsuit against someone instead of having a conversation and working out an arrangement that makes sense for both sides and I’ll show you a unicorn I have tied up in my backyard.

There are real potential consequences for the collection industry if they do not mount some kind of defense. Consumer advocates are mobilizing to get consumers to file comments about their issues with the Consumer Financial Protection Bureau’s proposed debt collection rule. The advocates argue the rule does not go far enough to protect consumers and want the CFPB to pull back on some of what it has proposed. This rule will impact the collection industry for a generation. The stakes are incredibly high.

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