Commercial Debt Recovery

There is a proposal to make some sweeping changes to the system of commercial debt recovery in the United States which my have a large impact in Australia amd around the world for debt recovery operations. The industry lobby groups in the US have hit back hard against the proposed legislation saying that the new laws would create even more red tape and more uncertainty around the debt collection process in the USA and would seriously threaten the viability of some of their businesses. The groups arguing this are largely debt pruchasing firms and debt collection firms. SOme of the lobby groups include DBA International, ACA International, the Commercial Law League of America and the National Association of Retail Collection Attorneys (NARCA).

Basically, the new laws propose that there be tighter regulation of the present debt collection processes and that a new federal body be established to oversee, regulate and monitor the industry. THe reason that is has become an issue of concern is that the global financial crisis appears to have lead to a marked increase in the amount of debt collection abuse and harrasment in the industry, although this may simply be a product of the larger volume of work being processed by debt collection agencies because of the greater proportion of people experiencing consumer debt problems.

Senate Banking Committee chairman, Chris Dodd is the major force behind the new legislation which would move the regulation of the industry from the where it currently sits in the Federal Trade Commission to a new body for regulating consumer financial affairs. The lobbyist argue that the new body would be biased to the needs of banks and financial instiutions in its setup and regulation because it would be a response to the problems experienced during the global financial crisis due to the misregulation of these institutions.

“Moving regulatory authority over the debt collection industry to a new bureau with unprecedented powers would neither help consumers nor businesses, creating uncertainty that would hinder effective compliance with existing regulations,” the associations wrote.