Collector – May 2019 - 16

COLLECTIONTIPS

Make Me an Offer
The word "settlement" comes with a lot of baggage.

D

ebt settlement offers seem like
a pretty straightforward way to
help consumers resolve their debt
when your regular collection methods
have petered out. But keep this in mind:
while you may think settlements are easy
to understand, consumers may not. Some
consumers find these offers confusing-
even the word "settlement" might lead
them to think you're referring to a legal
matter-and they can be a minefield if
handled incorrectly.
Your agency has undoubtedly set some
guidelines for which consumers can receive
settlement offers and the parameters of
those offers. But you should also know
that settlements are regulated by the Fair
Debt Collection Practices Act, and there
are a few things to keep in mind before you
extend an offer.

that settlement offers could mislead
consumers into believing their debt is
judicially enforceable when it's not. Follow
your agency's stated procedure for any
settlement offers made in connection with
an out-of-statute debt.

TAX CONSEQUENCES
When an amount of $600 or more is
forgiven, the IRS may require consumers
to report the amount forgiven to the IRS
as taxable income. Your agency needs to
consider whether a settlement offer must
also notify consumers of potential tax
consequences if they accept. Consideration
of this step isn't addressed in the FDCPA,
and courts have issued varying opinions
on whether creditors need to file a 1099-C
disclosure in these situations.

ONE TIME?
Unless a settlement truly will not be
offered again, don't use language that
would indicate the settlement is a one-time
offer, which could violate the FDCPA.
Saying "I'm able to offer you..." may be
better than saying, "This offer is only
good until..." Also, avoid indicating that
the settlement offer you're presenting is
the lowest offer the consumer will ever
get. Your client may decide later to offer
something even better.

OVERSHADOWING
Offering discounts during the first 30
days after a consumer has received an
initial communication from your agency
can be tricky, and you'll want to pay close
attention to the language you use when
describing them to a consumer (if your
agency allows you to offer settlements at all
during this time).
Don't offer consumers a settlement during
the validation period that requires them to
pay within those first 30 days in order to
take advantage of the discount. If you do
offer to let the consumer resolve the debt at
a discounted rate, make sure the deadline for
that offer extends past the 30-day period-
and by more than just a few days. And once
an offer is made, don't withdraw it during the
validation period.

OUT-OF-STATUTE DEBTS
Be careful when making settlement offers
on debts that are beyond the statute
of limitations. Some courts have ruled

16

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Collector – May 2019

Table of Contents for the Digital Edition of Collector – May 2019

Upfront
Industry News
Best Practices
FYI
Collection Tips
The Robot Revolution
ACA International’s 2019 Convention & Expo
Number Crunching
Calendar
Honor Roll
Education Spotlight
Regulators Should Be In The Business Of Helping The Regulated Comply
ACA SearchPoint
Ad Index
Membership
Last Word
Collector – May 2019 - Cover1
Collector – May 2019 - Cover2
Collector – May 2019 - 1
Collector – May 2019 - 2
Collector – May 2019 - 3
Collector – May 2019 - Upfront
Collector – May 2019 - 5
Collector – May 2019 - Industry News
Collector – May 2019 - 7
Collector – May 2019 - 8
Collector – May 2019 - 9
Collector – May 2019 - 10
Collector – May 2019 - 11
Collector – May 2019 - Best Practices
Collector – May 2019 - 13
Collector – May 2019 - FYI
Collector – May 2019 - 15
Collector – May 2019 - Collection Tips
Collector – May 2019 - 17
Collector – May 2019 - The Robot Revolution
Collector – May 2019 - 19
Collector – May 2019 - 20
Collector – May 2019 - 21
Collector – May 2019 - ACA International’s 2019 Convention & Expo
Collector – May 2019 - 23
Collector – May 2019 - 24
Collector – May 2019 - 25
Collector – May 2019 - 26
Collector – May 2019 - 27
Collector – May 2019 - 28
Collector – May 2019 - 29
Collector – May 2019 - 30
Collector – May 2019 - 31
Collector – May 2019 - 32
Collector – May 2019 - Number Crunching
Collector – May 2019 - 34
Collector – May 2019 - 35
Collector – May 2019 - Calendar
Collector – May 2019 - Honor Roll
Collector – May 2019 - Education Spotlight
Collector – May 2019 - 39
Collector – May 2019 - 40
Collector – May 2019 - 41
Collector – May 2019 - 42
Collector – May 2019 - 43
Collector – May 2019 - 44
Collector – May 2019 - 45
Collector – May 2019 - 46
Collector – May 2019 - 47
Collector – May 2019 - 48
Collector – May 2019 - Regulators Should Be In The Business Of Helping The Regulated Comply
Collector – May 2019 - 50
Collector – May 2019 - 51
Collector – May 2019 - ACA SearchPoint
Collector – May 2019 - Ad Index
Collector – May 2019 - Membership
Collector – May 2019 - 55
Collector – May 2019 - Last Word
Collector – May 2019 - Cover3
Collector – May 2019 - Cover4
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