Facts on Debt Reclamation

Consumers often rack up debt with credit cards and overspending.

Used internationally as a term for recovery of funds owed, debt reclamation in the United States represents the same activities and processes as debt collection. Collections can be made directly or using outsourced third parties.

Function

Civil pursuits of debt often rely on collection agencies to chase down the debtors. For decades, businesses have contracted with collectors to pursue debts, enabling them to focus on new business functions rather than worrying about delinquent accounts.

Considerations

Under consumer protection laws, collectors can only go so far in reclamation efforts. The Fair Debt Collection Practices Act of 2006 provides federal oversight of collection practices, including limitations on the activities that are allowed in the pursuit of debt.

History

Many government agencies handle their own collections. However, some have farmed out these tasks. In 2004, Congress asked the Internal Revenue Service to hire private debt collectors for taxes. The agency reversed course later under a barrage of complaints.

References

• Federal Trade Commission: Debt Collection FAQ: A Guide for Consumers
• Federal Trade Commission: Fair Debt Collection Practices Act
• Women's Finance: Fair Debt Collection
• Internal Revenue Service: IRS Conducts Extensive Review, Decides Not to Renew Private Debt Collection Contracts
• ABC News: IRS Refuses to Stop Using Private Debt Collectors

Resources

• Privacy Rights: Debt Collection Practices: When Hardball Tactics Go Too Far