Congress needs to enact laws expanding consumer protections against abusive debt collection, the U.S. Supreme Court unanimously ruled in 2017. Tennessee residents may have heard about the case, which involved a class action filed by several people who defaulted on car loans. Defendant debt collector Santander Consumer USA Holdings ultimately prevailed because it was not collecting money on behalf of a third party.
Debt obtained from bankrupted finance company
Santander bought the debt from a financier going through bankruptcy, which made Santander the owner of the debt. As written, the U.S. Fair Debt Collection Practices Act applies to third-party debt collectors that are collecting debts on behalf of creditors. The act does not apply to parties that are collecting debts they own, like Santander. The plaintiffs sought to expand the law to apply to debt owners as well as third-party collectors, but the Supreme Court said that is a job for Congress and the nation’s lawmakers.
Bankruptcy filings stop debt collections
The case illustrates how a bankruptcy filing can put an end to harassing calls and help individuals in financial difficulty. Upon filing a Chapter 7 or other bankruptcy in federal bankruptcy court, all debt collection activities cease on the debts cited by the filer. The filing gives the debtor the peace of mind knowing that debt collectors must stop all collection actions, including any existing court filings against the debtor. The debtor also can emerge from the bankruptcy with debts restructured with qualifying debts discharged for good.
Debt collectors commonly accused of violations
More than $11 billion in consumer debt is subject to debt collection every year in the United States. Violations of the federal fair debt collections legislation continually rank among the top complaints received by state attorneys general and the U.S. Consumer Protection Bureau.
If you are overwhelmed with debt and subject to harassing collections practices, an experienced bankruptcy attorney in the greater Nashville area may help to review your case. An attorney may be able to tell you which debts might be discharged and explain how to put an end to abusive contacts from debt collectors.