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In this week’s Research Assistant Peer Group meeting the subject of handling debt settlement companies was discussed.
While it is fine to work with a debt settlement company to resolve a debt, it’s essential to review the account’s facts when negotiating with them. What they offer may be reasonable, but it might not be. It’s acceptable to counteroffer or decline their offer if it’s unreasonable. Be sure to check whether the parameters align with your usual requirements. Unless there is a significant extenuating circumstance, you may want to refuse the offer.
Examine the account history, previous conversations with the consumer, and the consumer’s ability to pay more or the entire balance. Make decisions based on facts.
Where we all need to be careful is to secure information for consumers. Sharing potentially private information with a debt settlement company can be risky. You must limit the amount of data sharing of information with third parties without consumer consent.
Some debt settlement companies will scan information on consumer reports or other sources looking for accounts recently purchased or owed to debt buyers. They will then review their client pool to identify a consumer and contact you to propose settling the account. In these situations, you may not have the proper consent to discuss any information. Disclosing information to third parties without consent from the consumer would be a violation of FDCPA and other privacy regulations.
This issue also works in reverse. If you are tempted to contact debt settlement companies to inquire if they represent one or more of your consumers, this too will involve disclosing information without permission.
It was discussed that some states, like California, expect the debt collection industry to work with debt settlement companies. While this is acceptable, you must ensure that consumer information is protected.
When contacted by a debt settlement company, you can request documentation that the consumer provided to the company, granting permission for you to discuss their account and personal information. This permission differs from the company simply being allowed to communicate with you. Always ask for a copy of the written consent to protect yourself.
Often debt settlement companies will ask for you to contribute to them, allowing them to keep part of each payment as a contribution to them, but applying the entire payment to the balance owed. There is no obligation for you to do this. Simply let them know that you do not contribute and expect the entire payment to be sent and applied.
Additionally, be prepared to counter-offer. If you can’t agree on a reasonable settlement, review your account to determine your next steps if you choose not to accept the offer. Use that information to decide what is best for resolving the account.
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