Debt Collection During a National Emergency – An Eye on America Identity & Legislation

The USA has been described as the new epicentre of COVID-19 by the World Health Organisation, and with cases multiplying rapidly, the situation across the pond is going to get considerably worse before it gets better.

The question of debt collection throughout these troubling times is a difficult one to deal with all over the world, with legislation and obligation going head to head with each other.

There isn’t a clear-cut answer right now. Everything seems a bit contradictory.

In the States, the coronavirus pandemic, and more specifically how it impacts debt collection practices, has raised several social questions that go way deeper than the current crisis.

‘Are ethnic minorities affected by debt more than white people?’ is up there, as the issues of identity, gender and race come up yet again in the national conversation.

Well, data shows that black and ethnic minority groups are indeed more likely to face debt collection action, but this only tells half a story.

A lobbying group, who want to maintain debt collection activity during this time, actually say that suspending debt collection would do more harm to minority groups than if practices were to continue, given that the workforce of debt collection agencies is largely made up of people from these backgrounds.

As much as 70% of the debt collection workforce in the USA is female, and of this number, 40% are from diverse backgrounds.

See what we mean about contradictions?

There has been some decisiveness though, and here are a few of the measures already taken or being considered:

· New Yorkers are receiving a 30-day reprieve from state owned medical payments and student loan payments.

· The Education Department is urging all collection companies to refrain from pursuing debtors at this time, on a national scale.

· Chicago has suspended the collection of city debt for over a month at the very least.

· Legislation is being considered which would prevent debt collection agencies from things like disconnecting utility services until 120 days after a national crisis, such as this current coronavirus emergency.

In a nutshell, things are happening within debt collection in America that will affect people on all sides of the industry for some time.

The workforce, the claimants and the debtors (borrowers to use their term) will all be affected in some way, shape or form, and the pandemic is likely to create many more questions than answers.


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