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“Terms of Endurement”: Debt Collector Harassment

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Dallas, TXWhile debt holders and bill collectors will always maintain that they play by the rules, the reality is otherwise for a large cross section of consumers who continue to be harassed with threats and other related tactics, and even loan terms that constitute a form of harassment. Little wonder that so many Americans feel they have little choice but to fight back with a debt collector lawsuit.

Take student loans, for example. The Consumer Financial Protection Bureau (CFPB) went on the record in late October over concerns the organization has about the student loan business - specifically, charging unnecessary late fees and other forms of payment allocation designed to maximize late fees from students already struggling to pay off their student loans.

For example, holders of student debt have been known to charge late fees on loans that are in deferment or are subject to a grace period and thus, a late fee is inappropriate. The CFPB also notes that it has seen reports of lenders falsely telling students that it is not possible to discharge a student loan through bankruptcy. While it is true that student loans are somewhat more difficult to discharge within a bankruptcy proceeding than other forms of debt, the CFPB notes that student debt discharge within bankruptcy is not impossible. It’s a form of bill collector harassment to say otherwise.

“Students are already struggling with crushing amounts of loan debt,” CFPB Director Richard Cordray said in a statement, warning lenders that the agency “intend[s] to hold [lenders] accountable for how they treat borrowers.”

Then there’s the story of a Texas mom from Dallas, who became caught up in the spiral of payday loans following a string of financial and family hardships. Cynthia, whose story was profiled in the nerdwallet finance blog (11/7/14), asked that her last name be withheld.

Her story is compelling. Cynthia and her husband of 25 years lost their home due to foreclosure in 2009. That was followed by a declaration of bankruptcy. Then, in 2012, the couple was issued a steep bill for electricity costs they couldn’t pay, so Cynthia sought a solution through the online payday lending market - eventually securing about $2,000 in funding from a handful of different lenders.

According to nerdwallet, it cost her $10,000 to borrow that $2,000. Each month, she owed $1,656 in monthly interest payments to four lenders, in order to service that $2,000 debt.

If that wasn’t bad enough, there was the debt collector harassment Cynthia was made to endure. She reported receiving three or four calls per day from each company, totaling up to 16 calls in a 24-hour period. The nature of the calls, Cynthia reported, was nothing short of bill collector harassment.

Examples of the debt collector harassment Cynthia endured included threats to freeze her bank account (to which the online payday lenders had access), accusations of fraud and threats to file a lawsuit against her. Cynthia was also threatened with having her situation reported to the credit bureau.

Such tactics are expressly forbidden under the Fair Debt Collection Practices Act, a federal statute that governs the framework by which a debt collector can pursue a debt.

In the aftermath of the bill collector harassment that Cynthia endured for about two years, the Texas mom was forced to close her bank account. She also lost her job. And her family, nerdwallet reports, was homeless for a period of time. But she endured, and paid off the last bit of debt in April of this year.

It is not known if Cynthia has or intends to file a debt collector lawsuit.

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READER COMMENTS

Posted by

on
My loans have grown from 66,000 to 177,882.76. I am in class so I am suppose to have deferment but according to fedloans which my loans are currently with I am 6,000 dollars late fee. M loans have been transferred 4 times from ASC to Citibank Student loans, to SallieMae and now to Fedloans where the interest compounds of my consolidated loans to a interest rate of 6.8%. These loans are pushed by the universities to keep poor and middle class people in bondage. I work at a state University I qualified for the Public Service Forgiveness loan. I have been working at this job for 20 years when I applied for this loan Salliemae transferred my Loans to Fedloans. Who said I wouldn't qualify for this loan until 2025 after making 10 years of full time payments at $2,158. I don't bring home this amount so good luck with that one but I have paid all of these various federal loan servicing department somewhere near $65,000 which has all gone on a proportion of the interest. Meanwhile the interest keep growing on what should have been a consolidated loan but in actuality is two separate loans with an interest on both of $177,800. I really think this loans should be investigated.

Posted by

on
I took student loan of $12,500 1981-1987. Since then the debt has been "sold off" many times, each adding up to $6000 in "fees". When I contacted them to get copies of documents, and for them to prove they even paid for any loan ... I was met with contempt, then they "sold" it again 2x since 2009! The bill is now over $55,000 and despite being unemployed from 4/09 thru 11/2011 they simply attack me and destroy my credit at the original 9% interest. I'm afraid to contact them, afraid they will garnish wages, afraid I will lose everything if they take my little bit of remaining property as SunTrust now claims to "own" the loan (refused to show me any purchase or transfer, and state the loan occured in 1987 AFTER I graduated college!). Incidentally, SunTrust placed me in foreclosure on my home also in 4/2009, yet I took loan with 1st Choice Mtg locally (FHA loan) and then they scammed me with phony loan-mod and never sent me any papers .. I fought until 10/2014 all the way to WI Supreme Court (who refused to review case) and used forged note & mortgage docs w/o my true signatures on them to take my home!!! I really need your help here... Thanks

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