Obama seeks debt collector proposal

http://apnews.excite.com/article/20111004/D9Q5E32O0.html

APNewsBreak: Obama seeks debt collector proposal

By DAVID ESPO

WASHINGTON (AP) - To the dismay of consumer groups and the discomfort of Democrats, President Barack Obama wants Congress to make it easier for private debt collectors to call the cellphones of consumers delinquent on student loans and other billions owed the federal government.

The change "is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cellphones," the administration wrote recently. The little-noticed recommendation would apply only to cases in which money is owed the government, and is tucked into the mammoth $3 trillion deficit-reduction plan the president submitted to Congress.

Despite the claim, the administration has not yet developed an estimate of how much the government would collect, and critics reject the logic behind the recommendation.

"Enabling robo-calls (to cellphones) is just going to lead to more harassment and abuse, and it's not going to help the government collect more money," said Lauren Saunders of the Boston-based National Consumer Law Center. "People aren't paying their student loans because they can't find a job."

(Washington, DC) Buried in President Obama’s deficit reduction plan (see page 28) is a proposal to allow debt collectors “to contact delinquent debtors via their cellular phones” when collecting debts owed to or guaranteed by the federal government. The proposal will not help reduce the deficit and is harmful for consumers, the National Consumer Law Center warned today.

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Currently, debt collection calls to cell phones are limited because collectors must check their phone number lists against a list of known cell phones and cannot call those numbers unless the consumer has provided that number as a way of reaching them. Though the proposal is limited to debts owed or guaranteed by the federal government, millions of consumers will be affected, including graduates who can’t pay their loans due to the terrible job market, homeowners who are behind in mortgages, and people who are in tax disputes with the Internal Revenue Service. Families who have lost their homes to foreclosure could be exposed to cell phone calls for years if the delinquency on their mortgage is sold to debt buyers.

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Allow agencies to contact delinquent debtors via their cellular phones. The Administration also proposes to amend the Communications Act of 1934 to facilitate collection of debts owed to or guaranteed by the Federal Government, by facilitating contact of delinquent debtors who are most readily reached on their cell phones. This provision is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cell phones.

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