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.
Moving forward with arbitration
With consumers now barred from challenging mandatory arbitration agreements, debt collectors are free to initiate and follow through with the arbitration process with consumer debtors who may have otherwise challenged the requirements. Consumers who question the outcome of an arbitration settlement can do so in court, but under limited terms.
If you have questions about how the arbitration rule development could affect debt collection in your case, you can always speak directly with a debt collection agency for more information. Whether you are seeking to collect consumer, medical or another type of debt, you deserve to recoup what you are owed in an efficient and effective manner.