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How have NC’s debt collection laws affected access to credit?

North Carolina has taken steps in recent years to pass legislation protecting consumers from certain actions by debt collectors. Those collection companies argued that tightening the restrictions on how they are able to collect debts would restrict your access to credit. However, according to The Consumerist, it turns out that is simply not the case.

The North Carolina Consumer Economic Protection Act was enacted in 2009 and helped consumers in two ways. First, if a debt collector takes you to court over an outstanding debt, they must produce evidence if they want to secure a judgment against you. Previously, if you failed to respond to a lawsuit or did not show up for your court date, you automatically lost.

Second, collectors who purchase debts from other companies have to be able to prove that you are the one who owes the debt. In the past, they were able to rely on erroneous information and you may have ended up facing a court judgment for a debt that was not even yours.

Contrary to what the collection industry claimed, enacting these laws seemed to have no negative affect on your access to credit. A recent study looked at rates of new credit accounts, both before and after the laws were enacted. The study also compared rates in North Carolina to the rates of other states with similar economies.

It was found that more new credit accounts were extended in North Carolina after the reforms took place than in any other state, disproving the claims of the debt buying companies. This was true even for subprime borrowers with low credit scores. Therefore, if you live in North Carolina, you are well protected from unscrupulous debt collectors and still have plenty of access to new credit cards. This information is provided for general use and should not be construed as legal advice.

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