Collection agencies aggressively pursue consumer debt repayment during COVID-19

Over the past five months, many people have struggled with job loss, furloughs, and cut hours because of the economic fallout caused by COVID-19. In response, several federal and state agencies tried to take action to limit the harassing behaviors of collection agencies but many of them continued their practices.

Aggressive pursuit of consumer debt during the pandemic

While the coronavirus pandemic brought our country to a sudden halt, debt collectors didn’t seem to pause. In April it was reported debt collectors continued to aggressively pursue consumers who owed money despite the financial hardships they were experiencing. Furthermore, the Consumer Complaint Database also saw an immediate increase in its database of consumer complaints about debt collectors shortly after the pandemic reached the U.S.

Consumer advocates say collection efforts will ‘intensify’ as pandemic continues

In June, a column in the LA Times reported Christine Hines, legislative director for the National Association of Consumer Advocates, said the aggressive tactics employed by collection agencies would “intensify” during the pandemic. Hines noted agencies found it was easier for collection agencies to reach people at their homes because of COVID-19-related layoffs and shelter-in-place orders.

“The pandemic didn’t change how abusive debt collectors are, it just shows that they are capable of doing even more harm to vulnerable consumers than we thought,” Hines said in June.

A July press release by Prodigal, a debt collection AI software company, reported more than 50% of collection agencies surveyed from 30 U.S. states said they were able to increase their ability to collect debt. More people being at home during the pandemic were specifically noted.

How to handle debt collectors during the pandemic

People who are suffering from emotional distress due to being unemployed or struggling to pay their bills during the pandemic can take action.

• Reach out to lenders before debts are sent to a collection agency, many will work with people who owe money.
• Verify the money is actually owed because sometimes collectors pursue the wrong person or the debt itself is wrong.
• Talk to the collector, at least once, and see if they’ll accept a payment plan that is affordable.
• Check the statute of limitations on the debt owed to see if it’s expired.
• Send a stop contact letter to collection agencies using harassment techniques; this will give a break from the harassment to figure out a solution without dealing with the stress.
• Pursue an alternative credit score to help consumers get and maintain good credit.

Remember, any debt collector who breaks the law when making contact can be reported under the Fair Debt Collection Practices Act. People who owe money are allowed to sue collectors who break federal law. Also, certain special consumer protections are in place to help people manage debt during this difficult time.

PRBC understands the challenges consumers are facing during the COVID-19 pandemic and is here for you during this difficult time. Our alternative credit score model can help consumers maintain good credit as they pay their regular monthly expenses. If you’d like to learn more about our alternative scoring process or have any other questions, contact us today.