This was the headline of a January 12, 2017, Release from the Center For Responsible Lending. ”CRL” as it is known, is a nonprofit watchdog group that purports to promote fair financial practices with research, policy and legal solutions, and consumer tips. CRL has been a strong opponent to the finance industry since its inception in 2002. Much of the data and analysis that was used to pass the Dodd-Frank Act came out of CRL's work. CRL has now turned its attention to Debt Collection.

We have written many times about the CFPB's proposed regulation of the debt collection industry. Last August, we analyzed for you the Outline of Proposals here: https://www.sirote.com/blog/consumer-finance/what-do-sirote--permutt-and-the-cfpb-have-in-common--we-are-both-focused-on-the-impact-of-debt-collection-. The proposals took the form of regulating third-party debt collectors, rather than first-party debt collectors—those collecting debts owed directly to them by their customers. However, recall that the CFPB Outline does place certain burdens on first-party collectors, and the CFPB did issue a Bulletin concerning “field calling” that has application to first-party debt collection, addressed here: https://www.sirote.com/blog/consumer-finance/cfpb-new-years-resolution-crack-down-on-debt-collection-. Comments have been received by the CFPB with respect to its Outline of Proposals, and we are now in a “wait and see” mode.

And this brings me back to the headline of the CRL article about consumers feeling “threatened” by debt collectors. Without explanation, this can mean anything from fear of bodily harm to fear that consumers may have to repay a justly incurred debt. The fact is that most of the debts that are being collected by third-party debt collectors are debts that have been incurred for goods received or services rendered. Debt collectors rightfully point out to consumers that the failure to repay will result in negative credit history and future ability to incur debt.

Incurring debt is not a right of the American consumer; it is a privilege extended by America's creditors; and, in order for capitalism to prosper in the American economy, it is fundamental that justly incurred debt be repaid. Non-payment drives up the cost of credit for all Americans who do honor their credit obligations. It hardly seems fair for the CRL to complain that consumers who don't pay their debts suffer collection actions—whether collection calls or law suits. The CRL study reports that about 75 percent of those sued do not go to the court hearing. However, nowhere does CRL publish studies that state the number or percentage of resulting default judgments arising in situations where customers truly do not owe the amount claimed.

The CRL also describes debtors in these terms: “The overwhelming majority of people who are in debt and being pursued by collectors are not in debt by choice, but due to circumstances such as unexpected job loss or serious illness.” Accepting this assertion on its face does not alter the fact that most all debt being pursued by the nation's debt collectors—whether first-party or third party—was justly incurred and due to be repaid. Most creditors with whom I am familiar will work out repayment terms with customers who have undergone unusual, adverse circumstances.

Certainly, there are unscrupulous debt collectors. However, the number of debtors who do not repay their debts dwarfs the number of collectors attempting to follow the rules and collect on behalf of their creditors. It's time for a reality check in the land of consumer protection.