FEDERAL RESERVE BANK REPORT SUGGESTS THAT DEBT COLLECTION RESTRICTIONS NEGATIVELY IMPACT AVAILABLE CREDIT
Thursday, June 1st, 2017
The Federal Reserve Bank of New York recently released its report Access to Credit and Financial Health: Evaluating the Impact of Debt Collection. The report analyzes the impact state debt collection laws have on consumers’ access to credit. The report suggests that restricting collection activities leads to a decrease in access to credit and to a deterioration in indicators of financial health. The decrease in access to credit is stronger for borrowers with low credit scores. In layman’s terms, the report suggests that banks will loan less money if states make it harder for the banks to get paid back.