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New laws for secondary debt collectors announced

Aug 22, 2014 Philip Burgess

New laws for secondary debt collectors announced

Workers in any given industry have to carefully abide by laws, though that might not seem overly apparent. For instance, when a consumer enters a clothing store, that facility must have enough exits, the proper lighting, displays set a certain width apart, cannot have too many products on one shelf and so on.

The debt collection sector is all too aware of the need to follow strict regulations. There are laws outlining when these professionals can speak to consumers, who they can call for more information on the whereabouts of a debtor, what can be said on a voicemail and other details. Recently, yet another rule came out regarding the need for secondary debt recovery account holders to announce themselves to consumers.

Reiteration of delinquent account required

According to the New York Law Journal, a new ruling by Southern District Judge William Pauley in Tocco v. Real Time Resolutions has resulted in case law that will require secondary debt collectors to re-notify consumers of delinquent accounts. The main reason for doing this is that it will help individuals avoid confusion revolving around who currently owns a debt.

There are particular details that recovery professionals will have to follow as a result of the ruling. As the source noted, Pauley determined that after a collector gets in contact with a consumer, he or she then has five days to send a notice outlining the amount of debt owed, who the creditor was and an official statement that this debt will be considered legitimate if the consumer doesn't dispute it in 30 days.

The judge claimed that this rule is supported by section 1692 (a) of the Fair Debt Collection Practices Act, something in which collection firms are well-versed.

So, what happens next?
Essentially, this rule is relatively straightforward, so compliance should not be too difficult. However, it does represent a change in the processes debt recovery agents have been abiding by for years.

As such, it should be a primary concern of leaders at collection firms to work this new information into training and documents. Employees just coming into the business, as well as those who have been involved in the industry for years, will need to be made well aware of the case law. After all, if a worker doesn't comply, the debt holder could potentially begin a lawsuit, and any money collected might be nullified. This would not just result in lost revenue, but also affect the reputation and legal standing of a recovery firm. Making employees cognizant of this new law as soon as possible should be a top concern for firms.