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How would you revise the FCRA, or the FDCPA?

RobertEG
Legendary Contributor

How would you revise the FCRA, or the FDCPA?

I am kinda curious as to how members of the community, given the opportunity, would amend either the FCRA or the FDCPA, both of which are getting kinda aged in keeping up with many current issues......?

I know what my first priority would be, but am curious as to how others feel.

Message 1 of 17
16 REPLIES 16
Mustanglvr2006
Valued Contributor

Re: How would you revise the FCRA, or the FDCPA?

This is a very good question Robert, and I'm interested in reading the replies from the Members.

 

My biggest gripe (off the top of my head) is derogs.

 

I believe 7>7.5 years is far to long to report a derog, I mean someone who makes one mistake and misses one single payment to a CCC/Car Loan/Mortgage etc... and as a result, a 30 day late is put in their credit file/s for 7>7.5 years from DoFD is far too harsh of punishment, why does this have to be on your reports so long?

 

I feel the same way about CO's, CA's etc........7 years + 180 days, come on, people make mistakes, do they really have to pay for that mistake for 7>7.5 years?

 

Yes there are people out there that are habitual offenders who abuse CCC's etc.... and are time and time again not paying their bills, weather it be a major life event that took place and caused them to default (such as job loss, economy etc...) or just the type of person (especially when young and don't know any better, even mid aged irresponsible people) who continuously default on payments, either way, I feel 7.5 years of punishment is far too long. (especially if the person makes an effort to pay back the debt)

 

If the person who defaulted pays back the debt, then after 6 months the creditor should be mandated to have the derog removed, and if the debt is not paid back, the creditor either seeks a lawsuit of writes it off and the derog must be removed in, say,  3 years and blacklists that person from ever getting credit with them again. I guess there would need to be a certain amount owed that would determine how long a derog stays on a persons report and/or how many creditors the person has burned and so on.

 

I also feel Collection Agencies should not exist, the defaulted debt should stay with the OC, there are some rather uhm, not so ethical CA's out there, that will agree to a settlement, get paid, and then turn around and sell your debt to another CA, that's just not right!

 

There are people who commit haynis crimes everyday and are sentenced to far less time in prison, but yet a 30 day late stays on your credit file for 7.5 yrs, something's wrong with this picture.

 

I do not have an answer as to how long a derog should remain, and I understand there has to be consequences, but IMO the current timeline of 7.5 years Max is far too long.

 

And BK for 10 years, is just nuts.

 

This type of stuff is far beyond my scope of knowledge and my reply may sound idiotic, but this is just my opinion.

 


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Message 2 of 17
Booner72
Senior Contributor

Re: How would you revise the FCRA, or the FDCPA?

No, Mustang, it doesn't sound idiotic.  I'd vote for exactly what you are voting for.  When I wrote my GW to the judge to get the judgment vacated, I said that exactly - that yes I made a big mistake, but 7 years is a "very long sentence."

 

 

I would also want it so that the CRA has to do more to verify/validate disputes.  They always take the side of the reporting party over the consumer.  When the consumer sends in PROOF the debt is not theirs (aka DH's medical collections i can't get off my reports), then the CRA should give more weight to that.

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Message 3 of 17
veracious
Established Contributor

Re: How would you revise the FCRA, or the FDCPA?


@RobertEG wrote:

I am kinda curious as to how members of the community, given the opportunity, would amend either the FCRA or the FDCPA, both of which are getting kinda aged in keeping up with many current issues......?

I know what my first priority would be, but am curious as to how others feel.


RobertEG, an amendment I would suggest would be stricter regulations in the area of employment background checks.

 

I'm sure you are aware of all the pluses and minuses of the current regulations. So, for the benefit of those who might be

curious, I wanted to include a link to the subject   http://www.privacyrights.org/fs/fs16-bck.htm

In the above referenced document (athough it's very wordy)  my amendments would be with Sections 4&5. found near the middle of the page.

To me, it seems like more accountibility is neede by both employers and employment screening companies.

 

Another worthwhile document to read for those who are interested:   Fact Sheet 16b: Small Business Owner Background Check Guide

 

http://www.privacyrights.org/fs/fs16b-smallbus.htm

 

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Message 4 of 17
thankfulheart
Established Contributor

Re: How would you revise the FCRA, or the FDCPA?

I agree with Mustang for the most part.  There should be a "rehab" or "accident forgiveness" clause that for non-habitual offenders, x number of months of ontime payments deletes older lates.  7 years is entirely too long to hang someone out to dry.  30 days/12mos, 60 days/2 yrs, 90 days/3yrs, etc.  If you've got a 150, it will drop off after 5 years.  I also think if you "rehab" a loan or CC, they should "re-set" the account, so for instance, we hit a rough patch in 2007 and did a mortgage modification to save our house.  We've been on time with it ever since, so I think there should be a way to remove the previous negative notations once you hit, say 36 months of good payments.

 

The bankruptcy issue is a touchy one with me.  I know people who had a bankruptcy fewer months ago than my Hell Year (that I recovered from and paid everyone off) who have been able to buy new cars and houses while I still can't get decent credit for anything. It's OK for me to pay $1200 in rent, but I can't get a $900 mortgage?  I've had lenders tell me I should have opted for BK, it would have hurt me less.  I also know a couple who rack up cards, buy new cars, etc on his credit, then he files, then she does the same on hers, she files, then it's back again to his.  I have no idea how they get away with it and it makes me angry. I think there should come a time when you have a permanent stamp on your CRAs for NO credit if you continue to abuse and not learn from mistakes. 

 

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Message 5 of 17
cahiatt
Contributor

Re: How would you revise the FCRA, or the FDCPA?

I also think that 7+ years is too long and I would like to see the bad debts put into some sort of tier system based on their value. I sometimes wonder the impact it would have on the system if lates or other baddies did drop automatically after payment or for a shorter amount of time than if left alone. I have friends that don't want to pay charge-offs because "it won't help their credit" according to them. It's sitll going to report for 7 years.

 

Maybe something like this;

Tier 1 - Medical

Tier 2 - Taxes

Tier 2 - Utilities

Tier 3 - Secured Debt (houses, cars, etc..)

Tier 5 - Unsecured Debt (credit cards, signature loans, etc..)

 

 

 

Tier 1 - Medical - Should be completely removed from reports as soon as paid or a payment arrangement is established. Almost consider them not being allowed to report AT ALL. Most of these debts are not from someone seeking credit but from illness that most likely could not be controlled. I've never had a medical debt on my report but cringe at the thought of going to the hospital for three days and end up with a $10k medical collection because some un-insured idiot rear-ended my car.

 

Tier 2 -Taxes - Should be completely removed after full payment or payment arrangements are made. Judgements vacated also after payment.

 

Tier 3 -  Utilities - I think should come off 90 days after being paid or payment arrange is established. You need utilities to live in most places. Being a good payer now shouldn't force you to pay a $300 electric deposit several years after being 30 days late on a water bill.....

 

Tier 4 - Secured Debt - Should be removed no later than two years after satisfaction of debt. Can still report up to 7 years if debt is not paid. Can continue to report up to 9 years if there is a 60+, 90+, collection, charge-off or judgement within the past two years on secured debt..

 

Tier 5 - Unsecured Debt - Should be removed no later than three years after satisfaciton of debt. Can still report up to 7 years if debt is not paid. Can continue reporting up to 9 years if there is a 60+, 90+, collection, charge-off or judgement within the past two years on unsecured debt.

 

 

Tier 4 and 5 lates or other baddies that have dropped will show again for up to 7 years if there is a new baddie in the past 24 months. Let's not hide the repeat offenders. Same for utilities and taxes but keep it in their respective categories. As an example, tax lien doesn't reactivate a credit card late payment from three years ago....

 

 

 

 




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Message 6 of 17
RobertEG
Legendary Contributor

Re: How would you revise the FCRA, or the FDCPA?

Some excellent points of focus for long-needed changes!

 

My primary intent in starting this post was to show the obvious.  Both the FCRA and FDCPA don’t get the current attention needed by Congress to keep up with changes in economic and practical changes.  That is understandable, as Congress has much to do, and credit reporting, scoring, and debt collection don’t rise to the top of the legislative pile each session.

 

My focus, as a former federal manager, is… how to manage the need for change.  This post has generated many excellent examples of what, as we as the consumers, see as the focus for change.  I am sure that the credit industry also has their own lists.  That begs the question… how do we get it done?

 

I don’t think Congressional revision of each individual area of either the FCRA or FDCPA is the most effective way to get it done.  Similar concerns are faced in almost all areas of federal legislation.  In many, if not most, areas, the “system” deals with this ongoing need to update by use of the federal rulemaking process rather than basic revision of the statute.  In a nutshell, Congress empowers, within the legislation itself, one or more federal agencies with the authority to propose and enact federal rules or procedures that have the full force and effect of statute, provided they are first subjected to the rigorous federal rulemaking process, and contain no provisions that are inconsistent with the statute.  That “gets things done” in a more efficient and timely manner.

 

Unfortunately, Congress has decided, in both the FCRA and FDCPA, not to grant general rulemaking authority to any federal agency.  In fact, the FDCPA, while granting the FTC authority to administer violations of the FDCPA (FDCPA 814), then literally almost strips them of the ability to do that by barring them of any authority to propose and enact federal rules to carry out that task.  Almost amazingly, at least to me, the FDCPA includes the specific provision, at section 814(d), that:

“Neither the Commission nor any agency referred to in subsection (b) may promulgate trade regulations or rules or other regulations with respect to the collection of debts by debt collectors as defined in this title.”

 

No wonder the FTC has seemingly thrown up its hands when it comes to active enforcement of consumer complaints regarding, for example, FDCPA violations of dunning notice and debt verification violations, or provided binding rules clarifying those murky processes. Other examples abound across both the FCRA and the FDCPA.

 

Congress, when implementing the new direct dispute process, did refreshingly choose to handle the actual implementation, not by enacting detailed statutory language, but rather by requiring specified banking agencies to propose and enact the implementing regulations.  A refreshing approach that led to the publication of the rules for the direct dispute process in the Federal Register on 7/1/2009, with an effective date of 7/1/2010, which are now in effect through federal rulemaking rather that detailed statutory procedures.

 

It is apparent from this post that we, as consumers, have a long list of excellent areas needing revision.

 

Taking for example the many suggestions for modifying the credit report exclusion dates for certain types of adverse items that have already been posted.  This is an example of how federal rulemaking could get that done in a simpler and more efficient fashion.  The existing periods are generally considered to be too long.  However, the statutory language only sets maximum periods.  Thus, shortening those periods would not require statutory revision, as they would be consistent with the existing statute.  It could be done by federal rulemaking.

 

One simple revision to both the FCRA and FDCPA would, in my opinion, get the ball rolling.  Simply amend each to authorize use of the federal rulemaking process.

Then, having a better way to get things done, implementation of specific changes would be possible.  I don’t see it all happening by piecemeal revision of the statute itself.

Message 7 of 17
RobertEG
Legendary Contributor

Re: How would you revise the FCRA, or the FDCPA?

Could not the long-debated ambiguity about what constitutes "debt verification" under FDCPA 809(b) not also be answered by rulemaking?

Message 8 of 17
thankfulheart
Established Contributor

Re: How would you revise the FCRA, or the FDCPA?

You said "federal rulemaking" and "simpler and more efficient" all in the same sentence! The oxymoron made me giggle.

 

Humour aside, very thoughtful and correct, but HOW to make it happen?  Lawmakers would have to be able to see things from the constituent's POV and that simply isn't going to happen, in my opinion.

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Message 9 of 17
RobertEG
Legendary Contributor

Re: How would you revise the FCRA, or the FDCPA?

The FTC has, several times in the past, asked congress for rulemaking authority.  So consumers arent the only ones who might support such an initiative.

Since the rulemaking process requires public input, the credit industry might also support such an effort.

Message 10 of 17
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