Revco Solutions Guide to Removing from Credit Fast

Revco Solutions: How To Deal With Debt Collections Effectively?

Introduction

The Debt collection industry in the United States is on the rise. If people simply take on more debt, and then are unable to pay and therefore more accounts end up in collections. While you might not find all of it fun or easy, there are tips and tricks to help you deal with debt collectors when it comes to your rights and how to communicate with your collectors during the process.

In this comprehensive guide, I will share key strategies and tips to verify debts, negotiate settlements, fix credit damage and take your power to control your financial situation. A better understanding of what debt collection laws are and how the process works will help you deal with collectors and repay debts you can afford. There is hope for those with debt collections whether you connect with creditors directly or opt for professional help from an honest agency like Revco Solutions.

Understanding Debt Collection

To consider strategies, it’s worth to go back into knowing what you’re getting into when diving in debt collection, and who the major players are in the industry.

What is Debt Collection?

The pursuit of payments on overdue bills which consumer or business does not pay is called debt collection. Debt buyers or collection agencies take action on behalf of creditors or lenders to recover some or all of a debt that is owed.

Some types of debt that are commonly turned over to collections include:

Credit card debt
Medical debt
Personal loans
Auto loans
Mortgages
Utility bills
Cell phone contracts

If the account is too far behind, though, the original creditor will usually write it off as a loss and sell it to a debt buyer for pennies on the dollar. Then the debt buyers attempt to get the most out of that money for themselves and, if unsuccessful, to likely turn to collection agencies.

The Debt Collection Industry in the USA

The USA debt collection industry has made over $12 billion in a year, and there are more than 6000 agencies that are responsible for hiring over 230000 collectors that chase consumers that are behind in making their payments On average every year.

In the United States, both levels of government and state governments have direct control over the debt collection sector and industry.

Americans are protected under Fair Debt Collection Practices Act laws which protect American citizens from being harassed or being approached in a deceptive way.

There are also a range of laws in place by the state government as in the case with the United States, where there are regulations concerning the maximum interest rates that collectors can charge, licensing criteria and the statute of limitations.

As a consumer, comprehending the restrictions imposed on collectors as a result of these statutes is essential in ensuring the protection of your rights.

Rights of a Debtor

The Act and the federal government made it quite clear that there are laws that are in place in order to guarantee that consumers are accorded fair treatment throughout the debt collection period. Being acquainted with the statutes enables collectors to uphold their end and not violate the law by using unscrupulous ways to make you pay the debt.

The Fair Debt Collection Practices Act (FDCPA)

FDCPA is pivotal for the regulation of collection practice in the United States. The objective is to put an end to the abusive practices such as those of the debt collectors and to regulate the industry by placing boundaries. There are several prohibitions for the FDCPA including the following mentioned below:

Restrictions on when and how collectors can contact you: Collectors cannot call before 8 am or after 9 pm without your permission. And they are limited to no more than one call per day to your home and place of employment.
Prohibitions against harassment: Collectors cannot use violence, profanity, or threats against you. Tactics like continuously calling to annoy/harass are forbidden.
False statement prohibitions: Collectors can’t lie or misrepresent information to you about the debt, its status, or consequences for non-payment.
Requirements to verify/validate debts: Upon your written request, collectors must provide documentation with details about the debt like the original creditor, payment history, total owed, and instructions for addressing disputes.

Knowing collectors’ limitations under the FDCPA can help you identify any violations. And under the law, you have the right to sue collectors who illegally harass or deceive you.

State-Specific Debt Collection Laws

While the FDCPA sets the baseline for collector conduct, state governments have additional debt collection laws that may differ across the country. For example, some states prohibit collectors from garnishing wages for consumer debt judgments, while others protect a larger portion of a debtor’s assets or property from seizure.

It’s important to understand the specific debt collection laws and consumer protections in your state. Key areas that often vary by state include:

Licensing/bonding requirements for collectors: States like California, Florida, Illinois require state licensure for collectors.
Statutes of limitations on debt: The window to sue to recover debt ranges from 3 years (Texas) to 15 years (Rhode Island).
Interest rate caps: Maximum interest rates range from 6% (Pennsylvania) to 45% (New Hampshire).
Asset/property exemptions: The amount and type of assets shielded from collectors during bankruptcy or other judgments.

So while it’s helpful to know your federal protections under the FDCPA, don’t assume that tells the full story for your situation. Research what additional rights your state provides its residents. This can uncover additional leverage to use dealing with collectors operating locally.

Verifying the Debt

Before paying a collector or providing sensitive information, it’s vital to verify they have adequate documentation about a valid debt belonging to you. Under the FDCPA, you have the right to request a collector validate this information in writing.

Requesting Debt Validation

If you dispute a debt or simply want to verify an unknown collector’s legitimacy, send a debt validation letter requiring them to produce documentation that:

Identifies the original creditor
Shows your name/address indicating you took out or authorized the debt
States the debt amount and exactly what it’s for
Proves they are licensed to collect debts in your state

Once received, collectors then have 30 days to satisfy your validation request or they must stop all collection efforts. And they cannot attempt further collection activity without providing proof you asked for.

Having collectors validate the debt forces them to definitively demonstrate your obligation to pay and that they have legal standing to pursue you for it. Never feel rushed or intimidated into paying a debt without first validating relevant documentation.

Disputing Inaccurate Debts

Unfortunately, cases of mistaken identity or identity theft can result in debts appearing on your report that simply don’t belong to you. If this happens, act quickly to dispute inaccurate debts by:

Checking reports from all three credit bureaus: Errors may appear on one report but not the others, so review carefully.
Submitting dispute letters to bureaus: Inform them in writing which debts are inaccurate and request investigation/removal. Provide as many details as possible explaining why it is not your debt.
Filing disputes with collectors directly: Any collector contacting you trying to collect a false debt needs written notification as well.

Under the Fair Credit Reporting Act, the credit bureaus and collector must complete investigations within 30 days. If they cannot verify the debt as accurate, it must come off your record. If verified, request additional information proving it.

Do not allow collectors to damage your credit with debts that don’t belong to you. Persistently disputing errors protects your legal rights.

Communicating with Debt Collectors

A collector’s primary job is getting you to pay debts owed by any legal means necessary. Without proper precautions, phone calls can quickly become combative or intimidating. Know how to engage collectors on your own terms to gain control.

Best Practices for Phone Conversations

When speaking with collectors:

Record calls when permitted: Get written consent first in one-party consent states. This protects against illegal threats/harassment.
Take notes for all calls: Document names, company details, promises, threats…anything notable. This provides evidence if legal action becomes necessary.
Revoke consent judiciously: You can revoke consent to call your cell or employment number if collectors become bothersome. But expect increased letters/attempts at other numbers associated with you if calls are restricted.
Request no further contact: Under the FDCPA, collectors must honor written cease communication requests. Be aware this allows collectors to immediately proceed with legal action instead.
Avoid aggressive language: As frustrating as calls may become, abusive language gives collectors ammunition to justify their own in court. Stay calm and professional.

And remember – collectors are not your friends, and anything said can be used to gain leverage against you. Avoid chitchat or sharing unnecessary personal/financial details no matter how friendly they seem. Stick to only information verifying the debt and your intent/ability to repay it.

Written Communication Strategies

Written correspondence creates paper trails legally documenting all interactions with collectors. Whenever possible, rely on letters instead of phone calls:

Send debt validation letters: Require collectors to prove account ownership/accuracy and their standing to pursue you.
Follow-up calls with dispute/pay-for-delete letters: Summarize phone conversations in writing along with next steps promised.
Respond to settlement offers in writing: Document agreed upon repayment terms before sending funds.

In addition to certified mail providing delivery confirmation, written correspondence avoids he-said/she-said conflicts about verbal agreements. Keep collectors accountable by letting documents set expectations.

Negotiating with Debt Collectors

Skilled negotiators can often settle debts for less than the original balance. But accepting collector’s first offers or overpromising payments rarely ends well. Prepare properly and know what concessions to request.

Understanding Your Financial Situation

Before negotiating repayment plans, understand precisely what debts you owe and funds available each month. Creating a detailed budget accounting for all income/expenses allows you to:

Assess repayment ability: How much can you afford to allocate across outstanding debts monthly? Is paying lump-sum settlements possible?
Prioritize debts wisely: Rank debts by factors like account status, balances due, interest rates. Higher priority debts warrant directing more funds towards resolving first.
Explore alternate funding options: Could consolidating debts into a lower rate loan free up monthly cash flow? Are hardship programs available temporarily reducing payments?

Collectors work daily with consumers facing financial struggles, but they still need reassurance you’re acting in good faith before accepting reduced settlements. Demonstrate through documentation and realistic offers that although struggling, you take obligations seriously.

Debt Settlement Strategies

When negotiating debt repayment, collectors often present two options:

Lump-sum settlements: Paying a smaller percentage (e.g. 25-50%) immediately as payment in full. This requires having a large amount saved already or accessing funds quickly through borrowing/hardship withdrawals.
Payment plans: Agree to pay the full amount or a major portion over an extended timeframe (6-48 months). This allows slower repayment progress without requiring a large upfront payment.

Lump-sum settlements close accounts faster, but the sudden payments can worsen already tight budgets. Payment plans allow continued access to accounts in good standing but can take years paying interest before debts clear.

There are pros and cons to each approach. Evaluate your situation carefully and understand concessions to seek for either option.

Tips for Successful Negotiation

When negotiating debt repayment:

Gather documentation beforehand: Collect records proving financial hardship lowering income or increasing expenses. Photos of job layoffs, medical bills, divorce decrees…anything evidencing legitimate struggles.
Group multiple debts into one negotiation when possible: Settling/consolidating several debts with one collector gives them more incentive to remove balances altogether.
Offer terms you know you can fulfill: Extending payments longer than truly affordable hoping to renegotiate later destroys credibility for future deals.
Get all agreements in writing before sending payment: Verbal promises to delete credit reports or reduce balances evaporate without signed documentation first.

Even after successful negotiations, accounts can end up back with original creditors failing to honor deals if collectors don’t delete records showing $0 balances owed. Protect yourself by insisting all terms finalize in writing first.

Dealing with Aggressive or Illegal Collection Practices

While most collectors stay within legal bounds pursuing debts, some still resort to harassment, threats, or misrepresentation trying to intimidate consumers into repayment. But several laws exist protecting you from undue harm.

Recognizing Illegal Collection Tactics

Under the FDCPA, collectors cannot legally:

Threaten arrest or legal actions not actually planned
Falsely represent themselves as attorneys or law enforcement
Discuss debts with unauthorized third parties
Contact you after written cease communication requests
Call excessively with intent to harass
Threaten property seizure they cannot legally pursue

State laws also prohibit unfair practices like:

Charging usurious interest rates above legal maximums
Misrepresenting state law to intimidate consumers
Pursuing time-barred debts where statutes of limitations have expired

Other general red flags include collectors:

Refusing to provide written documentation when requested
Using abusive/vulgar language and threats
Calling repeatedly leaving no messages
Withholding important mail notices hoping you miss court dates

While collectors can legally be annoying trying to get paid, purposeful harassment and deception cross the line. Recognizing shady practices protects rights.

Steps to Take if Your Rights are Violated

If collectors clearly violate debt collection laws or harass you:

Report them immediately: File complaints with both the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) citing specific incidents and corresponding laws broken. State authorities should be informed of violations to local debt collection laws as well.
Consult consumer defense attorneys: Nonprofit legal aid organizations provide free assistance protecting consumer rights. They can help bring lawsuits under the FDCPA against collectors, recover illegal fees/payments extracted from you, and offer better informed guidance navigating complex debt issues.
Report violations to original creditors: Inform credit card companies, banks, hospitals, or other initial creditors when collections agencies break laws pursuing you. Creditors have financial incentive getting collectors to clean up tactics making them look bad.

When collectors cross lines, report them through proper legal channels. This builds documentation trails useful for future litigation and keeps them focused on lawful practices.

Creating a Debt Repayment Plan

The path out of debt starts with an honest budget accounting for income and priorities. Building a reasonable payment strategy around these constraints prevents promising more than possible long-term.

Budgeting for Debt Repayment

Begin debt repayment by creating a budget that:

Tracks all income reliably received: Include wages, side work, alimony, government benefits…any source of funds. Having organized records proves capability managing financial obligations.
Accounts for essential living expenses: Food, rent/mortgage, insurance, transportation…the basic costs unavoidable for household functioning. Collectors must see realistic budgets with these priorities addressed first.
Identifies discretionary spending to cut: Dining out, entertainment, club memberships…nonessential expenses that divert funds from potential debt payments. Temporarily reducing these helps in repaying debts faster.
Apportions income across debt obligations: Rank debts by priority factors like interest rates and account status. Higher rankings warrant directing larger portions of disposable income to knock them out sooner.

With this budget foundation reflecting actual financial limitations, you avoid defaulting on new repayment plans later. This helps demonstrate good faith efforts repaying collectors and allows renegotiating terms if situations change.

Debt Repayment Strategies

Two common strategies used paying down credit card, medical, and other unsecured consumer debt include:

Snowball method: Paying minimums on all debts while directing surplus funds at the smallest balance first before tackling larger ones. Knocking out a few small debts quickly offers motivation momentum helping accelerate repayment.
Avalanche method: Ignoring small debts first and directing all extra funds at the highest interest rate debt regardless of size. This mathematically minimizes total interest paid across everything owed.

The debt snowball builds confidence with quick early wins keeping you focused on consistent future repayments. The debt avalanche method optimizes dollars paid towards expensive interest charges.

Choose the approach fitting your personality and cash flow best – consistency knocking out small targets rapidly or efficiently eliminating high rate debt first. Either path clears obligations systematically avoiding wasted payments from scattered, disorganized efforts.

Seeking Professional Help

Reputable credit counseling agencies like Revco Solutions provide legally sound guidance managing overwhelming debts. Their experienced staff can facilitate negotiations, design realistic budgets, and monitor account activity helping you implement effective repayment plans.

Credit Counseling Services

Nonprofit credit counseling services offer assistance understanding collectors’ options and your consumer rights/responsibilities. They provide:

Debt reviews: Audit all obligations determining legitimacy, priority status, and repayment timeline estimates.
Budget analysis: Detail current financial situation and spending tradeoffs available to direct more towards debt.
Debt management planning: Facilitate discussions creating/submitting reasonable payment proposals aligned with budget constraints. Monitor agreed upon plans ensuring collector compliance.
Credit guidance: Provide ongoing credit education and coaching to rebuild scores during repayment.
Legal references: Connect clients to consumer protection attorneys if collectors violate agreements or laws.

Reputable agencies charge small monthly fees avoiding unrealistic promises or excessive upfront payments. Verify licensed nonprofits able to prove years assisting consumers through similar struggles first.

Debt Management Plans (DMPs)

For consumers facing truly unmanageable debt levels, credit counselors design structured Debt Management Plans addressing multiple accounts. These DMPs allow:

Lower interest rates: Creditors reduce rates (often below 10%) for consumers working with credit counseling agencies in good faith. This lowers minimum payments.
Lower monthly payments: Counselors negotiate reduced payment amounts better aligned with budget constraints.
Payment consolidation: Instead of tracking multiple separate creditor payments, one monthly amount goes towards the overall DMP for distribution across accounts.
Rapid payoff timelines: By dropping rates and securing terms tailored specifically around documented financial hardship, debts get eliminated in 24-48 months typically.
Limited creditor communication: Counselors handle all debt negotiations and correspondence for consumers. This removes direct collector calls/letters.

For people facing truly overwhelming debt compared to income, DMPs create structured roadmaps to financial recovery. Credit counseling services provide the guidance necessary avoiding bankruptcy.

Legal Options for Dealing with Debt

If consumer credit counseling efforts fail resolving unmanageable debts, more drastic legal options like bankruptcy and statutes of limitations exist protecting assets.

Bankruptcy

As last resorts, Chapters 7 and 13 bankruptcies legally discharge qualifying debt under court supervision:

Chapter 7 bankruptcy: Liquidates non-exempt assets like second cars, investment properties, etc. with proceeds distributed to creditors. Discharged remaining debts like medical bills and credit cards then dissolve completely. Here is the continuation of the article:
Chapter 13 bankruptcy: Allows keeping assets using future income over 3-5 years to repay debt. Monthly payments based on income go towards a court-supervised repayment plan until discharged portions of debts clear.

While bankruptcies ruin credit temporarily, they do allow shedding crushing debts not otherwise manageable. And after 5 years of responsible credit management, scores typically recover to reasonable levels allowing new lending again.

Consider bankruptcy carefully based on unique circumstances like assets at risk, incomes, and the timeline needing to use credit again. The damages are rarely as permanent as collectors threaten, but bankruptcies still impact loan/employment eligibility short-term.

Statute of Limitations on Debt

State laws limit the window creditors have to sue consumers defaulting on debt obligations. Timeframes range from 3 years to as long as 15 years depending on debt type and location.

Once statutes of limitation expire, debts become time-barred meaning creditors forfeit rights to pursue further legal action or lawsuits forcing repayment. But read the fine print carefully – making even small payments towards old debts can “re-age” them, resetting clocks granting creditors extended access again.

Some options once debts pass time-barred status include:

Seeking pay-for-delete agreements: Offer collectors smaller lump-sum settlements if they remove records from credit reports showing $0 balances. This helps credit scores rebound faster.
Challenging account accuracy: Dispute very old debts with credit bureaus directly requesting verification from purported creditors unlikely able to produce original records.
Submitting cease communication requests: Instruct collectors they can no longer legally threaten litigation or contact you trying to collect on aging debts.

While creditors rarely admit defeat pursuing old debts, consumer rights strengthen considerably once statutes of limitation run their course. Explore options carefully once you pass that threshold.

Rebuilding Your Credit After Collections

With reasonable precautions, low credit scores aren’t permanent life sentences. As the pains of debt collection and repayment fade into the past, responsible financial habits restore lending eligibility over time.

Understanding the Impact of Collections on Credit

Defaulted accounts sold to collections penalize scores two ways:

1) Missed payments: Included Payment history into the factor that make up 35% of the rating. Defaults crush averages.
2) Higher credit utilization: Unsettled balances add to the total debt that is placed against the not so extensive credit facilities. Despite the upper ranges being increased over time, maxed out usage history is detrimental.

The scores usually reach their lowest when collectors write off debts as non- payable at 180 days. Negative information such as unpaid debts remains on reports and hurts the scores for about 7 years before dropping off automatically.

However, since the last two years of operation influence the scoring models to a greater extent, then payments for new accounts serve to eradicate the marks associated with older and potentially problematic accounts more quickly now.

Strategies for Credit Improvement

Having taken action on collectors and the root of spending more than necessary, attention should be directed towards showcasing credit secured usage responsibly.

Pay down balances responsibly: Always try to use not more than 30% of the credit limit on the cards. The lower revolving balances seen consistently demonstrate the consumer’s capacity to handle the amounts being offered.
Explore secured cards: These needs refundable security deposits which offer higher initial credit limits irrespective of the credit history. If maintained well for 6 to 12 months, they upgrade to standard; unsecured cards.
Fund secured credit builder loans: They are like special savings accounts where money is kept aside at the same time credit lines show that payments are being made on time. After the term completes, all money deposited back out to you plus interest earned.
Always pay by the due dates: Payment history makes up over one third of scoring models. Set automated payments avoiding missed bills rebooting negative reporting cycles.

With diligence repairing the credit damage from past collections, scores rebound rapidly. The faster positive payment cycles establish the quicker new opportunities unlock financing better situations.

Conclusion

Debt collectors call over a billion times annually pursuing American consumers behind on financial obligations. Their persistence borders on harassment for good reason – over $50 billion hangs in the balance motivating them.

But federal and state laws also protect citizens from deceitful, abusive collection practices when provided the rights to dispute inaccuracies and negotiate reasonable repayment terms.

Arm yourself with proven strategies verified through appropriate documentation to settle collections under your control. Regain financial footing systematically and credit access returns enabling life’s important purchases possible again.

The path requires patience, but the destination exists shedding the stresses of debt collections for good. Let experienced partners like Revco guide you there.

FAQs

What are my rights under the Fair Debt Collection Practices Act (FDCPA)?

The FDCPA limits how often debt collectors can contact you and prohibits harassment, threats, deception, and revealing debt info to others.

How do I request debt validation from a collector?

Send a certified debt validation letter requesting documentation like your name/address on the account, original creditor info, and amount owed.

What should I do if a collector tries to collect a debt that isn’t mine?

Inform the collector in writing that you dispute the validity of the debt and request verification. File disputes also with credit bureaus and the original creditor.

When negotiating with a debt collector, is a lump-sum or payment plan better?

Lump-sum settlements close accounts faster but require large payments upfront. Payment plans allow slower repayment without much money saved already.

How long can a debt collector sue me to collect on a debt?

State statute of limitations laws limiting how long creditors can sue to collect a debt range from 3-15 years. The clock resets if you make payments on old debts.

Is bankruptcy a good option for dealing with large debts?

Bankruptcy legally discharges qualifying debts but also ruins credit temporarily until scores recover in about 5 years. Explore all options first.

Can collectors still contact me about very old debts?

If the statute of limitations has expired, collectors can no longer sue you but may still attempt calls/letters trying to collect on aging debts.

How do collections impact my credit score?

Defaults and unpaid collections crush credit scores for up to 7 years. Timely payments and lowering balances help scores rebound over 12-24 months.

What should I do if collectors repeatedly violate debt collection laws?

Report violations immediately to the CFPB, FTC, your state authorities, and the original creditors to build a useful paper trail for potential litigation.

Will my credit ever recover from debt collections?

Yes, with diligent credit management, scores typically rebound to decent levels allowing new lending 5 years post-bankruptcy or default. The recovery just takes time.