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Supreme Court rules on debt collection case

Debt collection companies in Massachusetts and around the country are forbidden from using deceptive or abusive tactics to collect money by the Fair Debt Collection Practices Act. The federal law applies to companies that collect unpaid bills on behalf of others, but the debt collection industry has changed greatly since its passage in 1977. Companies today often buy tranches of delinquent debts for pennies on the dollar, and consumer rights groups have called for the provisions of the FDCPA to be applied to these businesses also.

These calls are likely to grow louder following a June 12 Supreme Court decision. The nation's highest court ruled unanimously that the provisions of the FDCPA do not apply to companies that attempt to collect debts they have acquired from others. The ruling, which was authored by President Trump's appointee Neil Gorsuch, upholds a lower court's decision to dismiss a class action lawsuit filed by four consumers in Maryland.

The ruling means that about a third of the $11.4 billion debt collection industry no longer needs to follow the provisions of the FDCPA. Justice Gorsuch wrote in the ruling that any changes in debt collection laws should be passed by Congress and not implemented by the courts. Legal observers say that the ruling will likely prompt furious debt buying as collection companies seek to circumvent the law.

Persistent harassment from bill collectors can make a difficult financial situation almost unbearable, but filing a Chapter 7 or a Chapter 13 personal bankruptcy petition puts a swift end to this kind of abuse, at least temporarily. Attorneys with experience in this area could explain to individuals who are struggling to pay their bills how bankruptcy differs from other forms of debt relief and provides consumers with the possibility of a fresh start.

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