Congress recently voted to overturn a rule put forth by the Consumer Financial Protection Bureau that prohibited banks and other financial institutions from using mandatory arbitration clauses in the fine print of their contracts. Mandatory arbitration clauses prevent consumers from opting out of a requirement that they use arbitration to resolve disputes. In other words, mandatory arbitration clauses mean that consumers cannot band together against banks or other institutions in a class action lawsuit. Instead, each complaint must be handled individually behind closed doors.
Clearing the path for debt collection
The rule being overturned means that borrowers who may have issues with their banks, student loan lenders servicers or other institutions may face greater hurdles challenging terms of a loan or servicing details from a bank, student loan lender or other financial institution. While this may make things more difficult for borrowers, it may be good news for those whose job it is to collect the debt.