Consumer debt collection changes proposed - KXXV Central Texas News Now

Consumer debt collection changes proposed

(Source: KXXV) (Source: KXXV)

Debt collection is a 13 billion dollar industry with nearly 1 in 3 Americans owning a debt in collections.

The Consumer Financial Protection Agency and the Federal Trade Commission introduced a proposal aimed at altering how companies attempt to collect the debt.

In the 71 page proposal, they suggest eliminating aggressive collection tactics, including incessant calling, and suing debtors after the statute of limitations.

The measures are intended to ease some of the stress debtors may feel.

Josh Lawson, creator of the financial wellness program, Realign, is familiar with some of the lengths collectors go to for repayment.

"I mean I've heard horror stories of people trying to get out of debt, who are trying their best just to get out of debt. The collection agencies are relentless calling them at work showing up at work it's terrible," Lawson said.

While the proposed rules may ease some of the stress of paying back debts financial experts encourage debtors to pay what they owe as soon as they can. Many believe that debt elimination is the best relief.

Rachel Cruze, personal finance expert and #1 New York Times best-selling author of Smart Money, Smart Kids, encourages people to pay debts in order to grow financially.

"Instead of money going to 18 different bills credit cards, student loans you actually get to keep your income and invest it, spend it, even give it away. So what it does is really just frees up your life in so many aspects not only financially but also emotionally. Stress is also relieved when you don't have any payments,” Cruze said.  

Lawson spends much of class time getting to the root of overspending. Lawson encourages people to question why they are spending.

"We say, I deserve it, no matter if we have the money or not. I deserve to go out to eat, I deserve to numb the pain, whether it's shopping or whether it's Starbucks. That keeps us in these cycles of debt,” Lawson said.

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