The scenario presented in this recent ACA article highlights the complexities and legal ramifications debt collectors face when unknowingly contacting consumers who have declared bankruptcy. The court case, Carrasquillo v. CICA Collection Agency, Inc., illustrates how a debt collector was found to have unintentionally violated the automatic stay in bankruptcy because they weren’t informed of the consumer’s bankruptcy status. 

The Consumer Financial Protection Bureau (CFPB) supports the notion that debt collectors can still be liable under the Fair Debt Collection Practices Act (FDCPA) even if they’re unaware that their actions are in breach of the regulations. However, collectors who demonstrate they had “effective procedures in place designed to prevent the mistake” might not be held responsible (bona fide error defense). 

This is where EverChain’s Monitor service is invaluable. 

Account Monitoring for Better Risk Management

By utilizing EverChain’s robust compliance and account Monitoring tools, debt buyers and collection agencies can proactively conduct bankruptcy scrubs, which are thorough checks to determine if a consumer has filed for bankruptcy. This proactive approach not only minimizes the risk of inadvertently violating the FDCPA by contacting consumers under bankruptcy protection but also ensures that the debt collection process adheres to strict compliance standards.

Of course, bankruptcy accounts themselves can also be traded on the EverChain platform. Our network of bankruptcy portfolio buyers provides an outlet for creditors to capitalize on these otherwise complex accounts.

In essence, EverChain’s services can help debt buyers and collectors maintain a more cautious approach, reduce legal risks, and uphold their reputation by ensuring all communications are sent to eligible, non-bankrupt consumers.

For more information about account Monitoring with EverChain, contact us today.