Dealing with Debt Recovery Solutions? Here’s a six-step action plan
Were you the unlucky recipient of a call from Debt Recovery Solutions? Are you worried and unsure of how to deal with them?
You’re not alone. Read a few random reviews of the company online and you’ll notice a pattern of confusion, frustration, and even alleged harassment and fraud.
Of course, when debt collectors come knocking, it’s never a fun time. But to be completely fair, that doesn't mean every debt collection is unjust.
Still, if you think something doesn’t add up, here’s what you can do.
What is Debt Recovery Solutions, LLC?
Before we jump into the action plan, a quick explanation of how the company works.
Debt Recovery Solutions is a New York-based debt collection agency that buys debt from original creditors, such as hospitals or credit card companies.
Often, agencies like this purchase the debt for pennies on the dollar—with the intention of collecting the full amount from the debtor.
For example, imagine Mark owes his credit card company $12,000 in overdue payments.
The bill has gone unpaid for years, and the credit card company determines he’s unlikely to pay. To cut their losses, they sell the debt to a collection agency for $4,000.
A few months later, after failing to obtain the total amount, the collection agency agrees to accept the lower amount of $9,000 from Mark.
Although the agency didn’t receive the entire $12,000 they’d hoped to, they still made a $5,000 profit ($9,000 debtor repayment less the $4,000 cost they paid for the debt).
What to do if Debt Recovery Solutions comes after you: six-step plan
Step 1: Validation
The first thing you should do if you’re contacted by Debt Recovery Solutions is verify the debt, even if you believe the debt collection is legitimate.
- Inaccurate debt: While you may have outstanding debt, is the balance they claim correct? Does it reflect the amounts you’ve already paid? Have any other mistakes been made?
- Identify theft: Sometimes, fraudulent activity can result in someone else taking out a loan using your identity. As a result, a collector may come after you before you’re even aware the debt exists.
- Statute of limitations: Verification can help determine if the debt has passed the statute of limitations, i.e., whether the debt is past the age where collection is legally permissible. Statutes of limitation vary from state to state, so get to know the laws in your state.
- Missing paperwork: Creditors often sell their old debt to collectors. During the transfer, errors can happen, and paperwork can go missing. Verification ensures Debt Recovery Solutions has the official paperwork. Without it, they can’t pursue you for payment.
Step 2: Collect everything in writing
The debt collection process can span years. Small but important details can easily be forgotten, so keeping written records is critical.
Save all written communications you receive from Debt Recovery Solutions. Make a note of the date they were received.
Log any phone calls you have with the company. Note the time, date, representative, and nature of the call. Include any pertinent details, no matter how small.
Keep all your notes organized and accessible. Maintaining diligent records is only helpful if you can retrieve them when they’re needed.
Step 3: Learn your rights
It’s no secret that the debt collection business includes its fair share of shady actors and questionable tactics.
According to the FDCPA, “abundant evidence” exists “of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.”
So it is absolutely essential that you know your rights.
Consider familiarizing yourself with FDCPA regulations which are meant to protect consumers. Here are a few examples of the restrictions covered in the act:
- Debt collectors cannot contact you at inconvenient hours or locations.
- With few exceptions, collectors must honor written directions requesting they cease further communication.
- They cannot threaten or physically harm debtors.
- They cannot misrepresent their identity or any facts related to the debt.
- They cannot threaten legal action they don’t actually intend to take.
Step 4: Negotiate
If the debt is yours, consider negotiating a settlement or payment plan with Debt Recovery Solutions. Often, you can negotiate a lower amount than you currently owe, or agree to make smaller monthly payments.
Of course, most people would rather not have to negotiate with a debt collector at all. If that’s you, consider a debt settlement company instead.
They’ll deal directly with Debt Recovery Solutions on your behalf. If successful, you’ll work with the debt settlement company to make regular contributions to a separate account.
Ultimately, the proceeds of this account will be used to pay off the new lump-sum debt balance agreed to with Debt Recovery Solutions.
Step 5: Lookout for lawsuits
The stakes are raised if a debt collector files a lawsuit against you. Take the suit seriously, and definitely don’t ignore it.
If sued, consult the expertise of an attorney.
Ignoring the suit could allow the collector to obtain a default judgment from the court. This judgment can result in a lien on your home, wage garnishment, or other punitive measures.
Step 6: Consult a credit counseling agency
Consider consulting a credit counseling agency if you’re overwhelmed by debt or the collection process.
These organizations offer educational resources around debt, credit, money management, budgeting, and navigating financial challenges.
In extreme cases, they can even provide pre-bankruptcy credit counseling and pre-discharge debtor education.
Debt collection is no joke. And dealing with Debt Recovery Solutions can be intimidating, but you have resources to protect yourself.
So, remember: validate the debt, record all interactions in writing, and diligently respond to any legal action. Also, consider using a debt settlement company to negotiate for you.
Even if the debt settlement company doesn’t have all the answers, they’ll likely be able to point you in the right direction.
Most important, stay calm. Debt collectors are notorious for their strong-arm tactics. It’s part of the act. Don’t be intimidated. A resolution is within sight.