Though debt collection is an issue that plagues millions of Americans each year, for seniors it’s at the top of their complaints when it comes to financial products and services, according to a recent report from the Consumer Financial Protection Bureau (CFPB).
Since September 2013, older Americans have submitted more complaints to the CFPB about debt collection than any other financial product or service—representing one of every three (34%) complaints the agency has received from this demographic between July 2013 and September 2014.
Reverse mortgages only represented 1% of complaints during that time, while broader mortgage complaints constituted a 23% share of complaints.
Specifically, complaints regarding collectors hounding about medical debt, attempting to collect on debts of deceased family members and illegally threatening to garnish federal benefits have risen to the top of older consumers’ concerns, according to the CFPB analysis.
Many of these older adults have reported they are unable to afford debt payments, especially when they are retired and live on fixed incomes. They also expressed concern that the distress of being harassed by a debt collector aggregates existing medical conditions, thereby endangering their health.
“It is increasingly common for older Americans to carry debts into their retirement years, and consumers living on fixed incomes often struggle to pay off these debts,” said CFPB Director Richard Cordray in a statement. “Older Americans deserve to be treated with the respect they have earned.”
Debt collection is a multi-billion dollar industry with more than 4,500 debt collection firms nationwide, according to the CFPB report. Banks and other creditors may collect their own debts or hire third-party debt collectors. Original creditors and other debt owners may also sell their debts to debt buyers.
In 2013, approximately 30 million Americans, on average, had $1,400 of debt subject to collection.
Adding to the problem, older consumers could not identify the original source of the underlying debt in about one-third of their debt collection complaints, the CFPB noted.
Of the debt they were able to identify, older Americans said 33% was from miscellaneous bills such as rent, utility bills, phone bills and various membership fees. Other top sources included credit cards (17%), medical debt (10%) and payday loans (5%).
In efforts to help older consumers, the CFPB issued an advisory Wednesday highlighting what they can do to deal with debt collectors, including several sample letters individuals may use to find out more information about the claims being made against them, as well as how to dispute debt claims.
The CFPB analysis is based on approximately 8,700 complaints made by older consumers to the agency from July 10, 2013 to September 30, 2014.
Written by Jason Oliva