The Consumer Financial Protection Bureau (CFPB) turned five on July 21, 2016. The bureau’s purposes are to protect consumers from unscrupulous lenders and inform consumers to help them make financial decisions. Now that it’s five years old, the question is: Has the CFPB prevented needless bankruptcy filings?
Unfortunately, there aren’t any studies out there measuring the effects of the bureau’s rules and enforcement actions on bankruptcy filings, but the bureau has accomplished a few feats that have certainly helped debtors. Here are a few examples.
- Recovering $11.7 billion for 27 million people in enforcement actions against lenders, including about $700 million from Citibank and Bank of America each for misleading people into obtaining unnecessary credit-card add-ons. Of this, $3.6 billion went directly to consumers, and another $7.7 billion are thanks to principal reductions and canceled debts. The CFPB has also recovered money from financial institutions for charging overdraft fees consumers didn’t agree to, debt collectors engaging in illegal tactics against debtors who owe them nothing, and even mortgage companies for wrongfully foreclosing on debtors’ homes.
- Enacting new mortgage rules to help debtors buy homes they can afford. The bureau’s rules facilitate easier comparisons for consumers among mortgage products and its “Ability-to-Repay” rule prevents mortgage companies from lending money to people they know cannot repay the loans. The CFPB also restricts mortgages with teaser rates that lead to substantially higher monthly payments homeowners can’t really afford.
- Punishing debt-settlement companies for charging illegal upfront fees. Debt settlement is touted as a mechanism for avoiding bankruptcy, except the companies often charge fees for negotiating with creditors when they’re doing nothing at all.
- Advocating for student debtors. In one of its ombudsman’s reports, the CFPB discredited the justifications for restricting private student loans from bankruptcy and called for modest bankruptcy reform by permitting debtors to modify their loans along the lines of income-driven repayment plans for federal loans or chapter 13 bankruptcy.
- Pushing for increased checking-account access. The bureau asked the country’s 25 largest retail banks to offer unbanked Americans opportunities for low-risk deposit accounts with limited overdraft fees.
- Fielding 930,000 complaints from consumers about the behavior of financial institutions.
- Finally, tightening regulations on payday lenders.
Those interested in information on the CFPB’s successes and activities should read this post on its Web site.
It’s likely that some of the CFPB’s actions have helped keep people out of bankruptcy, but if it can’t offer help for your financial circumstances, then talking to an experienced New York bankruptcy lawyer might.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
