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May/June Feature Stories

Derogatory remarks remain on your credit reports for about seven years

Derogatory remarks can remain on your credit reports for about seven years. It takes time to make them disappear. The remarks will have less influence on your credit scores over time — and will even fall off eventually.

Creditors, such as credit card issuers, mortgage lenders and student loan servicers, regularly send information about your accounts to the credit bureaus. That information can either positively or negatively impact your credit. Items such as late payments, charge-offs, foreclosures and hard inquiries generally have a negative impact on your credit.

Expect one of these items to impact your credit within 30 days or so after a missed payment. But that timeline varies depending on when the lender reports to the credit bureaus and how quickly the credit bureaus update your credit reports. At that point, the credit-scoring company may use the updated information to calculate a new credit score for you.

Derogatory items may stay on your credit reports for seven to 10 years or more, according to the Fair Credit Reporting Act. But here’s the good news: As they age, negative items have less of an impact on your credit scores. Here’s how long you can expect derogatory marks to stay on your credit reports:

Hard inquiries 2 years
Money owed to or guaranteed by the government 7 years
Late payments 7 years
Foreclosures 7 years
Short sales 7 years
Collection accounts 7 years
Chapter 13 bankruptcies 7 years
Judgments 7 years or until the state statute of limitations expires, whichever is longer
Unpaid taxes Indefinitely, or 7 years from the last date paid
Unpaid student loans Indefinitely, or 7 years from the last date paid
Chapter 7 bankruptcies 10 years

It’s important to keep this in mind: Your debt isn’t simply erased once it falls off your credit reports. If you never paid off the debt and the creditor is within the statute of limitations, they may decide to try and collect the money. The creditor can call and send letters, sue you or get a court order to garnish your wages.

The only sure way to get rid of a debt is to pay what you owe, or at least an agreed-upon part of what you owe. If you’re looking to put your debt behind you and move on with a clean slate, contact the collectors listed on your credit report. Before making the phone call, make sure you know:

  • The debt is legally yours.
  • How much you owe the creditor.
  • What you can realistically afford to pay per month or in a lump sum.

If you negotiate a payment for less than the full amount owed, be sure to get the payment agreement in writing from the collector before you send in any payment.

Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit scores may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.

If a negative item on your credit report is older than seven years, you can dispute the information with the credit bureau. Ask to have it deleted from your credit report.

Positive information on your credit reports can remain there indefinitely, but it will likely be removed at some point. For example, a mortgage lender may remove a mortgage that was paid as agreed 10 years after the date of last activity.

It’s up to the lender to decide whether it reports your account information to the three credit bureaus. That includes your debt that’s been paid as agreed. You can call the lender and ask it to report the information, but it might say no. However, you can add positive information to your credit reports by using your existing credit responsibly, like paying off credit card balances each month.

You can build healthy credit over time by starting with these steps:

  • Make on-time payments. This is one of the most important factors that impacts your credit scores. If you think you can’t afford a payment, reach out to the lender right away. It may be willing to work out a payment plan and keep your account in good standing.
  • Check your credit reports. This will help you understand and track your overall financial health. Also look for errors, such as incorrect credit card balances, trade lines that aren’t yours and accounts that are incorrectly marked as delinquent.
  • Dispute and fix errors. About 20 percent of consumers have an error on at least one credit report, according to a Federal Trade Commission study. Getting an error removed may help your credit score improve.

How Your IVR is Costing You and How to Stop It

  • Written by Michael Meyer
  • Parent Category: Feature Stories
  • Category: May/June Feature Stories

meyer michaelDo you cringe when you have to push a button on an IVR? I know I do. So does everyone else. Do you still have an old traditional push button (push “1” for this or push “2” for that) IVR system hanging around handling or routing most of your inbound calls, or maybe taking a few payments? If so, it’s time to reevaluate it and consider upgrading or replacing it entirely with a newer, more customer friendly and capable system. You are probably thinking, “Why should I replace it? It has worked well for me all of these years and it probably will last a few more.” There are plenty of good reasons that you want to do this now. Some of those reasons are compliance related like Reg. E, the flexibility of changes and even the cost of those changes. However, the real reason is it is costing you more money than you realize. Let’s explore and discover the reasons why. You might have noticed that larger companies replaced these push button IVRs years ago. They are now on their second or maybe the third generation of the new IVRs. Why did they do that? You know why. The voice IVR sounds more natural, it does more, it is more flexible, it can be changed faster and it has a lower cost to operate.

The Critical Reason

Those are all essential reasons but not the critical one that drove the change. The real reason they made the change was to enable customers to self-serve themselves and get answers to their questions faster, more accurately and without waiting. Also, these changes mean those companies no longer need an employee in a call center or store to stop what they were doing to answer the same question for the umpteenth time that day. Because of the newer technology, you need less staff to do the same amount of work. Plus the new solution can quickly scale up as you grow. This also frees your existing staff to learn and perform functions that are more valuable. The potential cost savings in having less or redeploying existing staff is pretty significant now and into the future, no matter how small or mid-sized your company is. If making customers happy and saving money isn’t enough, then there is yet another perspective that will compel you to make the switch: climbing client expectations.

Expectation Escalation

If a new or existing client wants to experience what their customers will experience when contacting you and hears your archaic IVR, let’s face it, it’s not exactly what you want them to hear. So, what do you do? The first thing is to figure out what you want and need the new IVR to do. This is by far the hardest part because we are not used to laying out how we want a call to go or what routes the call should follow. I can tell you that mapping out each step of the call flow is by far the most valuable aspect of an existing or new IVR upgrade. Don’t skip this step! This will allow you to optimize what your IVR is doing in detail which is important because you might be paying for its usage by the minute, by each function that a customer chooses, paying a fixed or sliding percent of each payment or a combination of all of these. You can start this process by looking at what your existing IVR does (or doesn’t) and really looking at the IVR report.

As an example, can you see where people are pushing zero or hanging up? Can you see how many people are stopping at making a payment or how many try three or four times to enter information in before they zero out and take out their frustrations on your agents? Have you heard any feedback, good or bad, from your agents who take IVR calls? All of these are great places to start when deciding what the next version or generation of your IVR should do, how it needs to treat customers and how it must perform financially. Said another way, the more effective you make your IVR, the less you will pay in fees and the less your agents will have to work – which saves payroll. It really does not do you any good to spend time designing or buying a new IVR that ends up causing more than 90% of your customers to zero out and talk with an agent. That is just wasting money to say you have the latest toy and not doing the right thing for your customers or your business.

How to Measure Functionality

To help you get on the right track, here are two high-level measures to help you determine how your center and IVR are functioning. The first measure is called call deflection. Call deflection measures how many or what percentage of your overall calls were deflected away from human agents and handled by the IVR or an alternate non-human channel? As an example, out of 100 inbound calls or contacts, 50 were handled by agents, the IVR handled 30 and then the website handled 20. So you need to decide what you want these numbers to look like from an employee cost, technology cost and a client performance basis. Once you determine what the optimal ratio is for your business, you know what your overall design strategy should be. The second measure is call containment. This gives you an indication of how much work your IVR is really doing for you. This measure shows what percent of the calls that went to the IVR were handled entirely by the IVR from beginning to end without human assistance. Once you know this number, you need to take steps to improve it.

The bottom line with these numbers is that you might be wasting money on both sides of the equation (on the IVR and with agent’s time) and not even realizing it. This is why it is so essential to holistically and completely flow out the entire call process into and out of the IVR and not just look at the IVR as its own square box. When you do flow this call process out and look at the reports of what is happening in your current IVR, you will learn a lot and probably be surprised about what your customers are or more likely aren’t experiencing every day.

Melding and molding IVR technology with humans isn’t the easiest of things to get right. Most of us take many tries to make it work with lots of mistakes along the way. This is one of those things that is easy to say but hard to do right. So, take it one step at a time, play with it, make it fun and in the end your customers, employees and bank account will be glad you did!

Michael Meyer is the Chief Risk and Security Officer at MRS BPO, LLC

Tech Solutions From the Collection Floor

  • Written by Joshua Fluegel
  • Parent Category: Feature Stories
  • Category: May/June Feature Stories

Here’s a question: How many fellow collection professionals have you talked to lately about challenges you have faced on the collection floor? The vague but ideal answer would be: Many! Unfortunately, in an effort to a exude success many professionals will keep everyday struggles to themselves. This philosophy makes those struggles theirs alone. But sharing with others not only opens the door to valuable advice from fellow seasoned professionals, it also reflects favorably on the dispenser as a benevolent and astute member of the industry.

Receivables Advisor spoke with several collection professionals about challenges they have faced on the collection floor and how they leveraged their technological prowess and resources to overcome them.

What was a challenge on the collection floor and how did technology help your agency overcome it?

G. Scott Purcell
President of Professional Credit

purcell scottThe need we had on the collection floor was a technology platform with the flexibility to support a vast number of client interface requirements and to meet rapidly evolving consumer communication preferences. We have implemented a solution that allows us to achieve this. Our new AR management system, ARTrail, includes an EDI [electronic data interchange] subsystem, RoboDX, that seamlessly connects to both legacy and contemporary systems and handles any number of data configurations. It also provides interoperability with any communications platform, and manages workflows for consumer contact via text, email, IVR, telephone or letter.

Michael Ryalls
Chief Strategy Officer of RGS Financial

ryalls michaelWhen servicing sophisticated financial services clients, compliance is as important as performance. A great scorecard will not save you from poor compliance ratings. The challenge is managing QA [quality assurance] and collection performance on 100% of your contacts. CallMiner, with 100% speech analytics seems like a great solution, but we found it requires a high level of expertise to operate effectively. To achieve real results, you must train or hire internally, and both are very costly. After two years of trying, our solution was to partner with Provana and utilize their ICAP (Integrated Call Analytics Platform) product where they provide the know-how.

Howard George
CEO of Receivables Performance Management, LLC

george howard2Over the last few years Receivables Performance Management, LLC has noticed a shift in the behavior of the consumers we speak to: longer conversations that don’t result in a payment, and a shifting preference of younger consumers for a conversation-free solution to resolving their bill. Both of these challenges were addressed by an upgrade to RPM’s online payment portal. The new portal now serves as a full solution for consumers that prefer to resolve their bill on their own. It features the ability to setup full payment plans, settlements and a budgeting tool to help determine the right payment amounts.

Nate Kalnins
VP of Operations of The Stark Collection Agency

kalnins nate2Challenge: Gathering and integrating data

Solution: Our office has struggled at compiling usable data from our collection software and other outside sources and finding real-time, actionable insights from this data. Analysis could be done, but it required pulling programmers away from other projects to gather the data. To alleviate this problem, we began using Microsoft Power BI. This software allows the user to pull data from dozens of disparate sources (including our collection software, Excel, Access databases, web pages and more) to make the analytics-driven decisions needed to drive our business forward. Power BI allows for easily understood reports which can be easily generated without the involvement of a programmer.

Digital Age Collecting in a Regulatory Minefield

  • Written by Jeff Freedman
  • Parent Category: Feature Stories
  • Category: May/June Feature Stories

freedman jeffFor those of us who have been in the accounts receivable management industry for a long time, we know that collecting on debt is not for the faint of heart. We all take pride in the services we deliver but unfortunately we are also forced to deal with frivolous lawsuits from attorneys more interested in their own finances than helping their clients. Sadly, government regulators and courts around the country only muddy the waters more with contradictory statutes and inconsistent rulings.

It is no wonder that in a landscape littered with pitfalls and potential land mines, most agency owners are reticent to take risks that could improve the customer experience and enhance the bottom line. The mantra is almost always the same, “We want to try something new, but the risks of being sued are simply not worth it.” While totally understandable, the reality may be much different. Perhaps the risks can be worth it if the proper time is spent understanding precisely where the risks lie and by building the proper controls (preferably systemic controls) to ensure compliance.

Let’s take a look at a few examples. At my company, we have deployed several different digital strategies within the last couple of years that have helped make us more efficient as well as more effective.

Text Messaging

Texting is one such area. What makes texting a little more complex is the fact that you are dealing with both TCPA and FDCPA issues around consent and potential third party disclosure. When developing strategies, we recognize that nothing is foolproof, however our goal is to create a layered defense that helps mitigate risk. One way we did this was by creating our own tool that launches text messages without the use of an automated telephone dialing system (ATDS). By generating the texts in a manual fashion (requiring human intervention to send each text), we add an additional layer to any potential claim of a TCPA violation. This is not to say that we ignore consent but rather we don’t simply rely on consent as our only layer of protection. We also add another layer of protection by conducting a phone ownership scrub. This scrub enables us to gauge the likelihood that the customer we are seeking is the primary user of the phone. This adds yet another layer to our defense as we try to avoid sending text messages to the wrong party.

Finally, the messages we send are FDCPA compliant, both in terms of content and the time of day in which we launch them (the text cannot launch if it is outside of acceptable calling hours in the recipient’s time zone/address). Needless to say, this texting tool has been invaluable to us as we have increased our right party contacts by connecting with more customers who might never have engaged with us by telephone call or snail mail. We deploy many of the same controls and principles when we email customers, however it is worth noting that we have seen a much greater impact with texting than with email.


Another area where we have crossed the digital divide has been with our AI-enabled conversational IVR that we call ADAM. Unlike traditional IVRs, customers no longer have to “…listen to our entire menu as our options have changed…” At MRS, customers engage and interact with ADAM through conversation rather than by listening to menus and constantly pressing keys. While again, there is risk in deploying new technology, we believe the benefit is so substantial that it will revolutionize the way customers engage with us. Customers can now make payment arrangements, render a dispute, report a bankruptcy, to name a few, without ever having to speak to a live agent. They can also do so at times that are most convenient to them, including late into the evening or on the weekend. Countless hours have been put into quality control, testing, and training of the multitude of “responses” that create the overall user experience with ADAM.

Like with texting, our strategy has been to create layers of defense to try and mitigate risk. One example, is by always giving customers the ability to opt out to a live agent if they don’t wish to continue engaging ADAM. Other controls have been put in place to ensure that ADAM consistently gives the proper disclosures as well as verify the identity of the caller. As a further detective control, ADAM calls with customers are scored and evaluated with the same scrutiny and diligence by our quality team as those of the live agents.

Self-Help Web Portal

Customers can also engage us via our self-help portal on our webpage or even with live chat. Our goal is to give customers options that enable them to have more control in the collection process but also ensure that we are not exposing ourselves to unnecessary risk. For us, the rewards gained from our initiatives and strategies far outweigh those risks. It is also worth noting that, contrary to claims by some within our industry, not all customers are cut from the same cloth. Some prefer to engage us online, some prefer the less intrusiveness of a text, while still others prefer to engage ADAM. Then, of course, there are still those that prefer the traditional approach of speaking to a live human. We can now engage customers like never before and the results are a win for our clients, their customers, and those in our industry willing to take the risks.

Trying something different is often a little scary, and venturing into areas like texting and artificial intelligence can seem downright frightening with so much uncertainty. However, we all have collectively survived and thrived in the collection industry because we were willing to adapt and change with the times. The times have changed again and our industry has entered the digital age. Are you ready for it?

Jeff Freedman co-founded MRS in 1991. Jeff manages all aspects of the organization by providing direction to the Executive Team, Finance Department, and Legal Department; in addition to providing indirect oversight of Operations, Sales/Marketing, Human Resources, Training, Quality Assurance, and IT/Security.

Debt Collection Disrupted

  • Written by T. Steel Rose
  • Parent Category: Feature Stories
  • Category: May/June Feature Stories

rose steelDriverless cars are being tested and flying cars are predicted to arrive by some futurists in five years. Technological disruption is nothing new. How swiftly it changes an industry is the surprise.

Not that long ago there was no Uber or Airbnb. It’s now clear to see how they disrupted the transportation and hotel industry. Uber took an uncomfortable process (taxicabs) utilized a common asset (your car) and coded an engaging technology (your cell phone) to pay a much more pleasant driver to take you where you needed to go. Airbnb offered a similar proposition. They utilized a common asset (your home) and coded an attractive website for home and cell phone and disrupted the hotel industry. Amazon began with a similar proposition. They created a simple one-click ordering website for resale items like books.

When Uber, Airbnb and Amazon began they had one other silver lining in common. They all evaded taxes. Although, it’s really called tax avoidance until you cross the legal divide. Tax avoidance and paying debt avoidance have one thing in common. If the avoider is successful, someone else has to pay their way.

Venture capital is placing big bets on financial technology to disrupt uncomfortable processes. Take an uncomfortable process (reminding people they owe you) utilize a common asset (existing past due debts) and code an engaging website optimized for your cell phone, that incidentally has no tax consequences.

The convergence of the top accounts receivable professionals with the top technology providers for this necessary process will occur at Receivables Advisor’s CollectTECH 19, November 18-20 in Ft. Worth, Texas. This is not a new idea. CAT EXPO brought the best and brightest together for years. There, technological innovations were introduced. What we know as virtual collections was pioneered by Debt Resolve and Apollo. Ten years ago virtual collections was in its infancy. Now people are pondering when it will be the primary source for collections.

Future TECH

Talking like a futurist, I see two trends continuing: 1) First party and third party collection will be more integrated utilizing technology and, 2) text and email will become the primary methods for collecting past due debts.

My bold prediction is: those who support the taxing authorities will pioneer the future tech application for collections. Look to Massachusetts, California and New York City to follow Los Angeles in finding the next great collection technology solution.

I look forward to a day when someone who has lost the trust of creditors can be contacted, begin a payment plan and see their credit score improve each month. They can reach certain milestones and receive notifications like, “Congratulations, your credit score just improved to 600, you can be trusted to get a mortgage to buy a house again.”

There is something intrinsically fascinating about collections. When you loan someone anything or provide them a service or product in exchange for payment you are trusting them. When they violate that trust they have betrayed the trust you placed in them. When they can’t pay because of medical or other legitimate issues, we understand. When they have the means to pay but do not, and continue to violate the trust you placed in them, it stings.

Therefore, the business processing outsourcing of the collection industry takes on the hard work of asking people to be responsible and make payments toward what they promised to pay in exchange for whatever they received. It’s like parenting; you are reminding them they have a way to become trustworthy again. The problem is parenting is hard work. People don’t mind avoiding responsibility.

Top Receivable Professionals

This is an honorable profession built on helping people rebuild trust. Therefore we will continue our time-honored tradition of recognizing top professionals with an award ceremony at the conference. This year, after the Top 50 Professionals are awarded individually, the Most Innovative Agencies will be awarded and the Top 50 Products will be awarded. Then, the highlight of the evening, the Most Innovative Product, the Top Product and, drum roll please, the Professional of the Year. Be sure to cast your vote. See the ballot on page 28.