Don’t answer your cell phone! New bill would allow collectors of goverment debt to robocall you!

In a move that is not typical of Democrats, the Obama administration is pushing a bill that would make it easier for the private collection industry to robocall your cell phone when you owe a debt to the government.  Robocalling is when a collector calls your phone number endlessly, excessively, and ceaselessly, until you tear your hair out or throw your phone away.

This proposal is tucked into the deficit reduction bill that is in Congress now according to an AP article and it is intended as a means to collect more money for the government.  This law applies to debts owed to government agencies. These debts are primarily student loans but I suppose the law could apply to any government debt like back taxes, tickets, fines, fees or penalties.

These debts may have been owed originally to the government but the government will transfer them to private debt collection companies who want to robocall your cell.  The department of education apparently has the largest share of these debts at $28 billion that they have passed out to 22 private collection companies.

A a Boston-based consumer law center spokesman says in the article that this “is just going to lead to more harassment and abuse, and it’s not going to help the government collect any more money.”  The spokesperson goes on to say that people aren’t paying their student loans because they have not been harassed enough but they are not paying these debts because they can’t find a job.  The administration as of yet has no estimate of how much money they expect to collect from this practice.

I agree that it is likely that very little money will actually be collected by allowing robocalling of cell phones.  This new practice will just result in more stressed out people who cannot answer their cell phones for fear of getting one of these collectors on the line.  My bankruptcy clients which I interview every day typically are broke and out of work and they want very much to pay their bills but they cannot.  They universally have the desire to pay the bills but not the means.

I believe in the old saying that you can’t get blood from a turnip.  If people have no money and no job then no amount of phone calls will change reality.  If you mistakenly pick up a call and talk to one of these collectors then you will get no sympathy and just demands to pay.  If you say you have no money they won’t believe you and tell you to borrow the money.  These collectors are incentive driven and they don’t appear to care what you have to say as they get paid as much as 17% of what they collect from you.

The FTC (Federal Trade Commission) regulates the collection industry.  The FTC receives more than 100,000 complaints a year from the collection industry alleging harassment, demands for ridiculously large and unaffordable payments, and threats of jail time (which is illegal under the Fair Debt Collections Practices Act).  Apparently the collection industry receives more complaints than any other industry in America.

This move by the Obama administration perplexes consumer groups and Democrats alike.  The article points out that this bill aligns the administration more closely with the collection industry.  Democrats normally are more friendly to those in debt and generally Democrats protect consumers from additional potential harassment.  Many Democrats opposed the creditor friendly bankruptcy reform bill of 2005. (Joe Biden supported the law as he was from Delaware where many credit card companies are incorporated).  Many Democrats are now indicating that they can’t support this bill.

Hillary Clinton sponsored a bill a few years ago to make student loans dischargeable in bankruptcy.  That bill went nowhere though and these student loans are still non-dischargeable in bankruptcy.  So are the other government fines, fees, penalties, and most tax debt.  But the point is that they are not going unpaid because people are not being robocalled enough.  People have no jobs and no money and that is why payment is not forthcoming.

Robocalling by private collectors is currently allowed under Federal law on landlines but only individually dialed calls are allowed to on cell phones.  Since more and more people have only cell phones now the collection industry has been lobbying the administration for this change in the law according to a spokesperson quoted in the article.  Apparently the lobbying has worked as the Obama administration has heard the call and pushed for this law.  The spokesperson says that robocalling is the most “efficient” way of collecting debts.  If you have ever been on the other end of the line that is receiving these robocalls you may have a different view as I have.

This is a terrible idea that will collect little money and result in the increased harassment of people with no means to pay these debts.  My clients come into my office already tapped out and they have no extra income even when we get their credit card debts discharged in bankruptcy.  If these people are not paying on these loans it is probably because they have either no job and no income or they are working at a reduced rate and barely affording their current bills.

If you are in this situation or you know someone who is, send them to myself of another bankruptcy attorney in your area.  We can help them discharge the credit card and other private debts so that more money is freed up to pay the non-dischargeable government debts like the student loans.  You can work out a payment plan for the student loans if you can afford one.

If this law is passed then debt collection will become that much more invasive, annoying and bothersome.  My advice will then be: don’t answer your cell!

I am a San Diego bankruptcy attorney.  For more information please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  For a free consultation on bankruptcy or debt please call (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know may need to file a bankruptcy get my FREE E-BOOK: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING by e-mailing me at: farquharesq@yahoo.com.

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