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CFPB acts to stop creditor harassment by major U.S. credit union

Struggling with debt on a daily basis is extremely stressful. The level of anxiety increases when creditors call constantly and make ominous threats. Massachusetts consumers should keep in mind, however, that there are laws in place to prohibit abusive conduct by creditors attempting to collect on a debt. The Consumer Financial Protection Bureau, established in the wake of the Great Recession, is charged with enforcing many of these laws.

Recently, the CFPB reached an important settlement with the nation's largest credit union, which it accused of violating federal debt collection laws. Navy Federal Credit Union, which is open only to military members, veterans and their families, allegedly threatened members and froze their accounts when the members became delinquent on debts. Navy Federal allegedly shut down ATM access, debit cards and online banking services on 700,000 accounts. It also allegedly threatened to contact members' commanding officers if they didn't pay up.

Navy Federal has agreed to pay $23 million to members affected by the alleged illegal conduct. They will also pay an additional penalty of $5.5 million. As part of the settlement, Navy Federal must change the ways it contacts members who are behind on their payments, and has agreed not to use misleading statements or threats when doing so. They are also prohibited from blocking member access to accounts.

Filing for Chapter 7 bankruptcy is one of the most effective ways to stop creditor harassment. As soon as the case is filed the court enters an automatic stay which stops all collection activity in its tracks. A Chapter 7 discharge can eliminate most debts, and allow the debtor to get a fresh financial start.

Source: Palm Beach Post, "The Biggest Credit Union in the U.S. Will Pay $28.5 Million for Bad Debt Collection," Bob Sullivan, Oct. 11, 2016

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