A new law in North Carolina established new and enhanced rules for collection companies that are trying to collect unpaid bills and debts from consumers. Consumers will now have new protection. It deals with credit cards or other unpaid bills. Anything that a collector is pursuing.
For example, one of the new protections built into the process is the bill will protect North Carolina consumers from unfair debt collection calls and practices by debt buyers. This is a fairly new type of debt collector that will try to purchase old debts, on credit cards and other bills, and then the buyer will aggressively file lawsuits to collect on those unpaid debts.
This law extends regulation to these aggressive debt buyers, who the state of North Carolina had said have engaged in overly aggressive, if not illegal, debt collection practices. There have been instances in which the debts have already been paid or settled by the consumer, but the debt buyer pursues them anyway. Now, going forward, debt buyers need to prove that they have the right to enforce the debt and they must also be able to verify the amount owed. In addition, the new law also protects consumers in that it prohibits debt buyers from filing or threatening to file suit when barred by the statute of limitations, so they now have a time limit. Violators can face fines up to $4,000.
Currently, debt buyers now pay auto companies, credit card companies, hospitals and other creditors a fraction of the full amount due on the unpaid debts. They then work at forcing debtors to pay up, and there tactics are often questionable. Also, the North Carolina law extends debt-collection regulations to also include the law firms that often file lawsuits on behalf of the collection agencies to collect the cash. Critics of this new industry say debt buyers and the collectors will often pursue collection even when it is barred by law, such as when the unpaid bills or debt is discharged after bankruptcy or if it has lingered beyond the legal collection deadline, so it is technically expired.
Consumers and advocates who strongly supported and pushed for these regulations on debt buyers say that the debt collectors have been scaring consumers into paying up, even in those cases in which the debt has been paid, a settlement has occurred, or a statute of limitations for collection has expired.
So how do I stop the collectors in North Carolina?
Report it to the state. What will happen is that beginning next month, debt buyers and the collectors who try to collect on these unpaid bills and debts that they should reasonably know is blocked by a statute of limitations, or if their practices are illegal, they could face civil penalties and lawsuits of up to $4,000 per violation. And they could be fined for multiple violations. There are separate laws that protect consumers from medical debt collectors. Learn more about how to stop a medical debt collector.
In addition, the state law also will require the buyers and debt collectors to provide adequate documentation that will prove they own the accounts they're trying to collect. For example, trying to sue the consumer or debtor, or try to take them to court, will require that they have adequate records including the original account number of the bill or debt, and itemized statement of the charges and fees the current creditor claims is owed, as well as the name and other relevant data of the original creditor. So there is punishment to help protect the consumer.
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