Debt Collection Litigation, Except FDCPA cases, Increases in December

Consumer litigation cases and complaints to the Consumer Financial Protection Bureau in December 2015 contributed to record highs for both last year, but the month-to-month results did not surpass those from November. 
From November to December 2015, TCPA and FCRA cases increased by 5.9 percent and 5.6 percent, respectively; FDCPA case filings declined by 3.5 percent. There were 273 TCPA cases in November, compared to 289 in December, and 377 and 398 FCRA cases, respectively, during the same time period. There were 827 FDCPA cases in December, compared to 857 in November.
Of all the cases in December, there were about 1,275 unique plaintiffs (including multiple plaintiffs in one suit.) Of those plaintiffs, about 496 (39 percent) had sued under consumer statutes before.
 There were 2,686 complaints filed against debt collectors to the CFPB in December, and collection agencies responded to 93 percent (2,503) of those complaints in a timely manner. 
The most reported consumer concern continues to be contact about a debt they do not believe they owe (43 percent), followed by disclosure verification of debt (19 percent) and communications tactics (17 percent.)
The top five sub-issues in debt collection complaints were:

• Debt is not mine (26 percent)
• Frequent or repeated calls (12 percent)
• Not given enough information to verify debt (11 percent)
• Debt was paid (11 percent)
• Right to dispute notice not received (7 percent)

The highest number of identifiable complaints also continues to be in the “other” category for expenses such as phone bills or health club memberships, with 791 complaints (29 percent) in that category last month, according to the report. Credit card debt resulted in 565 complaints (21 percent) and 541 consumers reported they did not know about the type of debt (20 percent) followed by 438 complaints (16 percent) about medical debt.

Bankruptcy Filings Declined 10 Percent in 2015

Total bankruptcy filings in the U.S. reached 819,240 for calendar year 2015, a 10 percent decrease from the 910,397 total filings during the same period a year ago, according to data provided by Epiq Systems, Inc. and a news release from the American Bankruptcy Institute.
The 789,222 total noncommercial filings during calendar year 2015 also represented a 10 percent drop from the noncommercial filing total of 875,648 during calendar year 2014, according to the news release.
“Total commercial filings during calendar year 2015 were 30,018, a 14 percent drop from the 34,749 filings during the same period in 2014. Conversely, commercial chapter 11s registered their first year-over-year percentage increase since 2009 as the 5,309 filings during calendar year 2015 represented a 2 percent increase over the 5,188 commercial chapter 11s filed the previous year,” according to the release.
“While commercial chapter 11 filings increased slightly last year, total filings fell for the sixth consecutive year and bankruptcies decreased to their lowest number recorded since 2006,” said ABI Executive Director Samuel J. Gerdano in the news release. “However, as interest rates increase the cost of borrowing, more debt-burdened consumers and businesses may turn to the financial fresh start of the Bankruptcy Code in 2016.”
There were 53,806 total bankruptcy filings in December 2015, which represents a 15 percent decrease when compared to the 63,202 filings in December 2014, according to the news release.
“The 51,171 total noncommercial filings for December represented a 16 percent drop from the December 2014 noncommercial filing total of 60,700. Conversely, total commercial filings for December 2015 were 2,635, representing a 5 percent increase from the 2,502 filings during the same period in 2014,” it states.
There was an average of 1,736 total filings per day in December 2015, which compared to 2,039 total daily filings in December 2014 is a 15 percent decrease.
States with the highest per capita filing rate (total filings per 1,000 population) through 2015 were: Tennessee (5.73); Alabama (5.36); Georgia (5.02); Illinois (4.34) and Utah (4.28).

Consumers With Tax Debt Could See Restrictions on Passport Use

The FAST Act requires the IRS to use private collection agencies for some debts and strict rules are in place to ensure the collection efforts follow the new law. Tax debt collected by the IRS could impact consumers’ access or use of their passport. The Fixing American’s Surface Transportation (FAST) Act includes a provision for the IRS to revoke, deny or limit passports for anyone it certifies as having a seriously delinquent tax debt that is more than $50,000. It could mean no new passport and no renewal. It could even mean the State Department will rescind existing passports. Under the new law, the IRS must use private collection agencies to collect inactive tax receivables, which often amounts to tax debt the IRS hasn’t collected in the past due to lack of time or resources. Currently, the IRS is unable to collect $380 billion in tax debt – a 23 percent increase since 2009–according to a July report from the U.S. Government Accountability Office. 

Millennials With Money: How Younger Consumers are Managing Their Finances

Millennials with high incomes, or consumers ages 18 to 32 who earn $100,000 or more each year, are increasing their use of general purpose reloadable (GPR) prepaid cards while continuing to use traditional banking products such as debit cards and checking accounts for their finances. Sixty percent of high-income Millennials reported having a GPR card in 2014, compared to 49 percent in 2013. Overall, 25 percent of households used  GPR cards in 2013 and 2014 and overall ownership rates did not increase as much as they had between 2012 and 2013 (4 percent.) However, there was a jump from 49 percent of Millennials with household incomes of $100,000 or more and GPR cards in 2013 to 60 percent with GPR cards in 2014. Two other segments—Generation X with household incomes of $50,000 to $99,900 and those ages 68 and older—were the only other groups to own GPR cards in 2014 at proportionately higher rates than in 2013. In 2013 and 2014, 71 percent of consumers who owned GPR cards were younger than 49.

BEWARE: Credit Card Issuers Continue to Focus on Consumers with Existing Debt

CardHub’s 2015 Credit Card Landscape report shows debt accumulation decreased last year, but delinquency rates increased even as the unemployment rate declines.

CardHub’s latest Credit Card Landscape report for 2015, released Monday, shows interest rates and cash advance fees continue to increase and the Federal Reserve’s interest rate increase will cost consumers about $1.3 billion in additional credit card debt payments through this year.

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