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New penalties for banks that harass debtors in Indiana

Many people in Allen County have found themselves facing financial difficulties. For some, an unexpected job loss has put them behind on their mortgage and forced them to rely on credit cards while for others a medical condition has left them with hundreds of thousands of dollars in medical bills.

LENDERS AND HARASSMENT

Adding to the stress and pressure are the constant phone calls, emails and letters from banks and creditors demanding payment. Some collection agencies go further than that, according to CNN. Just recently, a debt collector was shut down by the Federal Trade Commission for their harassment of consumers. The harassment claims involved:

  • Threats of incarceration.
  • Posing as an attorney or a law firm.
  • Calling people’s workplaces and telling coworkers that the person was going to be arrested.
  • Threatening that a person’s children would be taken by authorities when they were arrested.
  • Charging attorney fees that were unauthorized.

Other collection agencies have threatened people’s pets and one agency was accused of holding fake court proceedings in an office decorated to resemble a courtroom. Those agencies have been fined or are in the process of being prosecuted for their alleged actions.

CRACKDOWN ON BANK HARASSMENT

While it is illegal for collection agencies to harass debtors, Bloomberg states that banks have been exempt of that policy since they are the actual creditors, but a new policy will now issue penalties against banks that are found guilty of creditor harassment.

The policy, put into place by the Consumer Financial Protection Bureau, makes it illegal for creditor banks to lie to debtors about how much they owe and to whom the debt is owed. Banks are also no longer allowed to use threats of arrest or make promises regarding a person’s credit. Such actions would be a violation of federal law and result in penalties against banks.

In May of this year, JP Morgan admitted that it will be held accountable for credit-card add-on products and for collection practices from federal regulators. Other lenders, such as American Express and Capital One, have already had been hit with fines for some of their practices involving credit cards.

BANKRUPTCY CAN STOP CREDITOR HARASSMENT

For people who are looking to make a fresh financial start, filing for bankruptcy can put an end to the phone calls and letters. Once a creditor is notified that a person has filed for bankruptcy they must cease their collection activity and deal with that person’s attorney or present their arguments to the judge overseeing the case.

There are several types of bankruptcy and debt relief options that are available to debtors. If you are overwhelmed with debt you should meet with an experienced bankruptcy attorney who can explain those options.